Monthly Archives: March 2020

macroafricaintel Daily Brief | 31 Mar

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji, @macroafrica

Global Markets

  • Asia shares inch up, China’s factories show flicker of life
  • Asia shares supported by month-end demand, calmer mood
  • China factory survey beats forecasts, PMI rises to 52.0
  • Oil prices steady for now after steep drop

Oil Markets

  • Oil rebounds from 18-yr lows after US, Russia agree to talks
  • Brent up 1.9% at $23.19 a barrel (0406GMT)
  • WTI up 5.8% at $21.26

Precious metals

  • Gold falls as dollar strengthens, shares rally; set to post quarterly gain
  • Spot gold down 0.5% at $1,613.40/oz. (0327GMT)
  • US gold futures down 0.2% at $1,615.80/oz.


  • Corn prices set for biggest quarterly loss in 5-1/2 years
  • Corn down more than 11% for the quarter
  • Soybeans down more than 7% for the quarter
  • Wheat up more than 2% for the quarter

Key African events or data releases today
[Posts & comments at my Twitter handles @DrRafiqRaji, @macroafrica]

  • Key African countries lock down; subdued economic activity
  • Kenya inflation Mar-20; newly rebased CPI today, forecasts likely off [fcst. 6.6% yy, prev. 6.4%]
  • South Africa Q4-19 employment statistics
  • G20 finance ministers & central bank governors Covid-19 video conference
  • Kenya parliament Kenyatta stimulus plan debate (expected this week); resumed yesterday
  • Uganda inflation Mar-20 [fcst. 3.7% yy, prev. 3.4%]
  • Nigeria FX reserves Mar-20 [prev. $36.38B]
  • South Africa balance of trade Feb-20 [prev. ZAR-1.87B]

Key African events or data releases yesterday & early a.m today

  • Zimbabwe locks down to fight coronavirus amid economic crisis
  • Egypt’s Sisi calls for boost of strategic food reserves during coronavirus
  • Egypt’s 2020-21 draft budget is based on oil at $61 per barrel
  • Botswana records first 3 cases of coronavirus – health minister
  • Morocco’s Bank of Africa posts 5% profit rise for 2019
  • Africa Oil – Nigeria starts lockdowns, demand dwindles as run cuts rise
  • South Africa’s Massmart says it has enough funding to weather lockdown
  • South Africa franchise restaurant chain Spur to defer interim dividend payment
  • South Africa rand touches all-time low after Moody’s pulls the plug
  • South Africa’s Netcare scraps 2020 outlook due to coronavirus
  • Locust stealing lives: Fears of farmers, herders in Somaliland as a plague looms
  • Developing nations need $2.5 trln coronavirus package – UN
  • South Africa policeman, guard shot man dead during lockdown – police
  • Africa’s megacity Lagos braces for 2-wk coronavirus lockdown
  • Sierra Leone lifts ban on pregnant girls attending school
  • South Africa’s big banks: Up to 20% of borrowers may not qualify for coronavirus relief
  • South Africa default insurance costs jump after rating cut
  • South Africa – Anglo American Platinum declares force majeure on certain supplier contracts after coronavirus lockdown
  • Kenya shilling holds steady against the dollar
  • Uganda shilling inches up as virus curbs demand for dollars
  • Impala Platinum declares force majeure on supply from South Africa mines
  • South Africa – Anglo American cancels rough-diamond sales event due to coronavirus lockdowns
  • South Africa credit growth in February rises to 5.09% y/y
  • Oil crash puts Africa’s cash-strapped producers in peril

N.B. Full stories of above headlines are available on Reuters

macroafricaintel Daily Brief | 30 Mar

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji, @macroafrica

Global Markets

  • Asia shares suffer virus chills, central banks offer what they can
  • S&P 500 & European futures call, Nikkei off over 3%
  • China, Singapore ease monetary policy
  • US extends social distancing guidelines to end of April
  • Treasury bonds rally further, yield curves flatten
  • Dollar down for the moment, oil under pressure

Oil Markets

  • Crude oil futures drop as pandemic pandemic darkens demand outlook
  • Brent down 6.7% at $23.25 a barrel (0249GMT)
  • WTI down 5.4% at $20.34

Precious metals

  • Gold gains as dollar weakens, fears of economic damage mount
  • Spot gold up 0.3% at $1,621.85/oz. (0029GMT)
  • US gold futures up 1% at $1,641.80/oz.


  • Wheat gains on world food supply concerns, soybeans up 1%
  • Wheat up 0.3% at $5.72-3/4 a bushel (0207GMT)
  • Corn down 0.5% at $3.44-1/4 a bushel
  • Soybeans up 1.1% at $8.90-3/4 a bushel

Key African events or data releases today
[Posts & comments at my Twitter handles @DrRafiqRaji, @macroafrica]

  • Nigeria locks down Lagos, Abuja & Ogun states for 14 days to curb covid-19 spread
  • South Africa M3 Feb-20 [fcst. 7.0% yy, prev. 7.0%]
  • South Africa PSCE Feb-20 [fcst. 5.0% yy, prev. 5.0%]
  • Nigeria FX reserves Mar-20 [prev. $36.38B]
  • South Africa balance of trade Feb-20 [prev. ZAR-1.87B]
  • Zimbabwe locks down for 21 days

Key African events or data releases over the weekend & early a.m today

  • South Africa records second coronavirus death as infections jump to 1,280
  • Nigeria orders 14-day cessation of movement in Lagos, Abuja to fight
  • Egypt’s banks told to limit withdrawals & deposits
  • Zimbabwe brings back foreign currencies ahead of coronavirus lockdown
  • South Africa sees IMF loan to fight coronavirus as last resort
  • South Africa could seek IMF loan to fight coronavirus
  • More coronavirus cases in Libya as fighting rages
  • Nigeria tightens offshore oil rules after vessel workers get coronavirus
  • Algeria says food stocks for months
  • South Africa announces tax relief for business hit by coronavirus
  • Angola to cut budget as fifth year of recession looms large
  • Mali holds election despite coronavirus and insurgency
  • Belly dancer keeps Tunisians entertained through coronavirus lockdown
  • South Africa may approach the IMF for “health funding” – Mboweni
  • Egypt’s central bank instructs banks to put temporary limits on daily withdrawals and deposits
  • New coronavirus cases confirmed in Libya as war escalates
  • 47-nation Africa has 2,650 confirmed coronavirus cases, 49 deaths – WHO
  • South Africa’s coronavirus infections rise at a slower rate
  • Tunisia gets 250 mln euros from EU to tackle coronavirus impact
  • Nambia suspends mining operations as coronavirus lockdown takes effet
  • South Africa billionaire Motsepe donates $57 mln to fight coronavirus
  • South Africa fuel prices to drop sharply in April
  • Algeria arrests leading journalist Drareni
  • Moody’s downgrades South Africa rating to ‘junk’, keeps negative outlook
  • Nigeria needs $330 mln for coronavirus battle, turns to private sector
  • Morocco to spend $200 mln to brace health system for coronavirus
  • South Africa struggles with lockdown as records first coronavirus death
  • Guinea referendum backs constitutional changes that may extend president’s rule
  • Zimbabwe orders total lockdown from Monday to combat coronavirus
  • Africa Oil – China provides a dim light as refiners shut
  • EU offers 450 mln euros to help Morocco counter coronavirus – statement
  • Zimbabwe billionaire offers health workers support in coronavirus fight
  • South Africa’s ARM receives force majeure from Impala Platinum following lockdown
  • South Africa’s AngloGold Ashanti cuts spending, suspends output guidance
  • Morocco to halt import duties on soft wheat, durum and grains – statement
  • South Africa tweaks rules for small-scale power producers
  • National Bank of Ethiopia to inject $450 mln as liquidity for private banks
  • Fight escalates in Libya despite coronavirus threat
  • Senegal’s graffiti artists join fight against coronavirus
  • Algeria extends curfew to nine more provinces over coronavirus outbreak
  • Nigeria eases to new low on spot market on FX scramble
  • Uganda shilling strengthens, buoyed by an interbannk sell-off
  • Some Kenya nurses refuse coronavirus patients in protest over shortages – union
  • Nigeria needs 120 bln naira for coronaviurs battle, turns to private sector
  • Zambia to suspend import duty on mineral concentrates, export duty on precious metals
  • Kenya shilling gains ground, helped by lacklustre dollar demand
  • South Africa’s Mediclinic names former Lloyd’s of London CEO as next chair
  • Anglo American expects South Africa lockdown to hit iron ore and coal
  • South Africa’s Amplats continues repairs on processing facilities despite lockdown
  • South Africa’s Vodacom chairman to retire in July

N.B. Full stories of above headlines are available on Reuters

macroafricaintel | Africa FX Monthly – Apr 2020

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji, @macroafrica

Click here for PDF version

Currency   1 month

(30 Apr 2020)

3 month

(30 Jun 2020)

6 month

(30 Sep 2020)

12 month

(31 Mar 2021)

South African Rand (USD:ZAR) 17.5 17.1 17.3 16.5
Nigerian Naira (USD:NGN) 391.0 400.0 405.0 415.0
Ghanaian Cedi (USD:GHS) 5.5 5.7 5.3 6.1
Kenyan Shilling (USD:KES) 104.5 104.3 104.7 106.3
Ugandan Shilling (USD:UGX) 3,801.0 3,853.0 3,825.0 3,911.2
Tanzanian Shilling (USD:TZS) 2,323.0 2,319.0 2,335.0 2,401.0
Ethiopian Birr (USD:ETB) 33.1 33.5 34.5 36.1
Mauritian Rupee (USD:MUR) 40.3 40.9 41.1 45.2
Namibian Dollar (USD:NAD) 17.5 17.1 17.3 16.5
Botswanan Pula (USD:BWP) 12.3 12.5 12.1 13.0
Zambian Kwacha (USD:ZMW) 18.5 18.7 19.1 21.1
US Dollar Index (DXY) 98.3 98.5 98.1 98.7

macroafricaintel | Good economics for African times (1)

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji, @macroafrica

“Be vigilant, resist the seduction of the ‘obvious,’ be skeptical of promised miracles, question the evidence, be patient with complexity and honest about what we know and what we can know” (Banerjee & Duflo, 2019).

The field of economics would probably provide better answers to the world’s many puzzles if the above statement by Abhijit Banerjee and Esther Duflo – MIT economics professors, couple and Nobel laureates, highly distinguished and controversial in almost equal measure – in their 2019 book “Good Economics for Hard Times: Better Answers to Our Biggest Problems” is imbibed by all of its academics and practitioners. Alas, this is not always the case.

Like you probably discerned already, Banerjee & Duflo’s approach to economics is unorthodox and – quite understandably – tends to rub off on some of their still mostly conservative contemporaries the wrong way. That they are mavericks is what appeals to me. That, and the likelihood that their success would embolden many more in the profession who remain shackled by orthodoxy.

What they espouse – vigilance, scepticism, patience, and honesty – does not come easily to fellow economists. Ordinarily, they should. But they do not. Because if they did, we should have more answers than doubts about the many questions that remain unanswered in the affairs of men.

“Economics is too important to be left to economists”
Many an economist would swear by his or her rigour, objective scepticism, transparency and openness to new ideas. The evidence suggests otherwise. If you want to know how entrenched the mainstream types are, observe their reactions when some little known colleague proposes something very “brave” or “courageous”.

Of course, the same novel idea could very well find acceptance if a more accomplished type proposes it; usually with a few tweaks here and there and a new fancy name. The more recent case of Modern Monetary Theory (MMT), the backlash it has received from mainstream economists, and the increasing likelihood it may become “orthodox” in due course, is a good example.

Banerjee & Duflo (2019) highlight how economists are not as trusted as they once were; ranked almost the same as politicians in a poll conducted by YouGov in the United Kingdom, for instance. Why is this the case? Economists have not been “modest and honest about what [they] know and understand” and have not shown a willingness to try new ideas and solutions and be wrong.

Economists’ predictions have been wrong most times than they have been right. But we continue to make forecasts anyway. (They are useful in other ways.) And continue to be wrong most of the time. For example, we know now for sure that markets are not efficient and that humans do not always behave rationally. And yet these are key pillars upon which much of conventional economics rest on. There is certainly a realisation in the profession of a need for a radical rethink of our ways.

Change is slow and difficult, however. This is understandable. After all, it would be irrational for people who built their stellar careers on these fallacies over many decades to simply just do a turnaround, wouldn’t it? Still, by digging their heels in on these proven untruths, economists prove the point of human beings not being always rational. Yes, behavioural economics now blossoms. But it took a while.

Self-preservation is rational, not correcting errors is not. The clearly rational irrationality of some mainstream economists in holding on to proven fallacious orthodoxies, as if they need them to breathe, is evidence enough that what is currently accepted knowledge should be queried. And this should apply to all intelligent endeavours. In other words, learn the orthodoxy, but do not accept it as gospel. It is not religion.

Banerjee & Duflo are exemplars of this ethos. Their 2019 book does not purport to have all the answers as much as it suggests a more sceptical and open approach to unraveling the still many mysteries in the so-called dismal science and the world at large. Is free trade always a positive? Is there a formula for growth? The duo did not provide straight answers to these and other pertinent questions. That is all very well. Africa must find its own answers.

macroafricaintel | Good economics for African times (2)

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji, @macroafrica

“Growth is hard to measure. It is even harder to know what drives it, and therefore to make policy to make it happen” (Banerjee & Duflo, 2019).

The obsession of the rich world’s economists with growth is understandable: growth has been anaemic in those parts for decades. And even with all sorts of unorthodox interventions, from quantitative easing to yield curve control, the needle has barely moved.

The conventional wisdom is that technological innovation and population growth should engender economic growth. While the latter has almost certainly been slowing – negative even – in the rich world over time, the same cannot be said of the former.

Still, the internet, artificial intelligence and many other productivity-enhancing technological feats of our time have surprisingly not been as revolutionary for growth like better and more education, electricity, the internal combustion engine, and others, were in the past.

There is a school of thought that believes trying to determine why this is the case is needless. This is because the answer may be more a child of time than effort; a sentiment echoed by Banerjee & Duflo: “Mostly, what is clear is that we don’t know and have no way to find out other than by waiting”.

Thus, as the duo also reckon, “the most important question we can usefully answer in rich countries [at this time] is not how to make them grow even richer, but how to improve the quality of life of their average citizen.”

African countries are not in the same boat with their rich counterparts in this regard; albeit 1-2% growth by its two largest economies in recent years makes you wonder aloud about that a little bit. Still, the authors agree: “It is in the developing world, where growth is sometimes held back by an egregious abuse of economic logic, that we may have something useful to say, though, as we will see, even that is very limited.”

No set path to growth
Economic growth is driven by skilled labour and capital; both of which are abundant in rich countries but scarce for the latter or imbalanced in poor countries. Adjustments to these variables can still result in significant shifts in growth and development for developing countries. For rich ones, however, what would be similarly impacting would have to be the kind of technological progress that makes already abundant skilled labour and capital even more productive. And while technological innovation is seemingly abundant, it has surprisingly not been as growth-enhancing as imagined. There are arguments about whether this is the case because we are measuring growth wrongly. That is not our focus here, however.

Industrial policy was hitherto frowned upon by conventional economists and policymakers. And yet East Asia’s success on the back of it is hard to ignore. This is a point Reda Cherif and Fuad Hasanov of the International Monetary Fund (IMF) make in their March 2019 working paper aptly titled “The Return of the Policy That shall not be named: Principles of industrial policy”.

They highlight how “True Industrial Policy” or “Technology and Innovation Policy” is a formula for growth when it abides by the following three key principles: (i) state intervention to fix market failures (ii) export orientation and (iii) the pursuit of fierce domestic and international competition.

I do not agree or disagree with their thesis. Instead, my goal is to show how what may be considered crude, ill-informed, or voodoo economics at the outset could later be celebrated by the same ex ante detractors. More fundamentally, it is evidence, like Banerjee & Duflo suggest, and as has been well-known in academic circles for ages, there is no one strategy for growth.

Banerjee & Duflo have a view on the East Asian example: “Those who herald the experience of the East Asian countries to prove the virtue of one approach or the other are dreaming; there is no way to prove any such thing. The bottomline is that, much as in rich countries, we have no accepted recipe for how to make growth happen in poor countries.”

The appropriate lessons from all these is not so much that because some form of state-driven economic development is now acceptable to the IMF, African countries should suddenly now see this as appropriate for their own development.

Instead, the lesson is that an economy must decide for itself what it needs to do to achieve sustainable development. Ponder this for a minute. Had the Asian countries now being celebrated taken the advice of the IMF and others to liberalise their economies and jettison state intervention, would they be the ‘miracle’ they are today? It is a rhetorical question.

As Banerjee & Duflo assert, “the bottomline is that despite the best efforts of generations of economists, the deep mechanisms of persistent eocnomic growth remain elusive.” Thus, my advice to African countries is to think independently about their respective situations and doggedly pursue the strategies they decide on.

macroafricaintel | Good economics for African (Nigerian) times (3)

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji, @macroafrica

“Why are there so few cash transfer programs, anywhere in the world, that are universal and come without strings attached? One simple reason is money. Universal programs in which no one is excluded are expensive…Initially, most of the money will have to come from shutting down other programs…” (Banerjee & Duflo, 2019).

Nothing short of cash transfers will do
With a significant reduction in economic activity due to COVID-19 restrictions, there is likely a substantial reduction in money supply in tandem. Many companies would probably lay off staff, cut salaries and even close shop. Participants in the informal economy, forced to stay at home, and deprived of an income, would have no new money to spend. A central bank could fill that gap by printing money equivalent to the shortfall for the purpose of unconditional cash transfers.

This is not theory. The United States has passed into law a $2 trillion stimulus package to deal with the negative economic effects of the COVID-19 crisis. It includes a direct payment of $1,200 to each American citizen and $500 per child. Small and medium-sized enterprises would also be able to tap $350 billion in loans. Big companies would similarly have access to $500 billion in loans.

How would it be funded? Money printing, of course. And are there not worries about inflation and a ballooning of the fiscal deficit? In an emergency, these concerns are insignificant. Is this a solution available to other countries? If the medium of exchange in a country is a currency issued by its central bank, yes, of course.

Besides, the consequent increase in the money supply could simply amount to bringing the overall level back to normal, after likely falling off due to the restrictions, with a likely non-differential inflationary impact. But even if that turns out to not be the case, that is, an above-normal increase in the money supply with a resultant inflationary impact of similar magnitude, the increase in the price level might not be as significant as some fear.

This is because ordinarily, sellers of essential goods like food and others, would likely hike prices on the back of hoarding behaviour regardless. That is, even before demand and supply dynamics dictate a need for one. What giving money to everyone to buy essentials does is ensure that it is not only the rich that are able to buy whatever limited stock of goods that are available.

But if there is more money chasing fewer goods, would that not stoke inflation? In the absence of controls, yes it would. Rationing, which is already being done in some countries, would be necessary, clearly. And some countries have already started banning the export of food and crucial medicines.

Besides, the global lockdown has already started to create international trade-related logistical challenges: transporting imported goods is increasingly now with some great difficulty. Available food for sale in many countries now is probably just those imported and stored in silos long before restrictions took effect; and of course, those produced locally.

The other concern could be that the cash transfers may be diverted to other purposes by recipients? Yes, they could. But if well managed, the proportion diverted might not be differential. Besides, research suggests most of the money from cash transfers tend to used for the desired purposes by recipients.

What about those without a bank account and/or debit card? There would need to be a tailor-made solution for those. The authorities already have a database of the very poor for its social programmes and an existing system for transfering cash to them.

Besides, the authorities could simply announce that those without bank accounts come to designated government centres to receive cash or the equivalent in food supplies and also get registered with one of the public social programmes in tandem.

How much would it cost Nigeria to pay the 30,000 naira minimum wage to its 40 million individual bank account holders for 3 months, say? 3.6 trillion naira; about a third of the 11 trillion naira 2020 budget.

With people staying at home and the world on holiday, who would work on any of the planned capital projects of the government for the remainder of the year? As there might clearly not even be projects for the government to spend money on, it could as well get the money into the pockets of citizens to spend. Printing money might not even be necessary for the task. Reallocations and cuts could simply be made to the 2020 budget to accommodate it.

Besides, there is already elite and political support for an unconditional cash transfer programme. Senior leaders in the ruling All Progressives Congress (APC) and main opposition People’s Democratic Party (PDP) have already come out in support of one. A taciturn President Muhammadu Buhari thus far probably now has an opportunity to speak to his people about some really good news in this time of general despair. And no, it is not populism. It is common sense.