Egypt and IMF agree to merge review

E kaaro o, Ututu Oma, Barka da Safiya - Good morning and welcome to a new week.

Starting today, we have expanded the data we share on this newsletter. We have broadened this newsletter to focus on Africa, rather than just Nigeria. We are motivated by the future that we see for Africa markets and economies. So, we have decided that, from today, we will monitor developments in the top five Africa exchanges, key commodity prices on the continent, and provide analysis of socio political and economic developments that move markets on the continent.

We also hope to share our new website with you later this week, so we can continue to connect beyond this daily newsletter.

I hope you have a great week.

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Markets

• Oil prices held steady on Friday but closed the week lower as markets weighed supply concerns stemming from Russia's fuel export ban against demand woes from future rate hikes. Brent futures settled 3 cents lower at US $93.27 a barrel. It fell 0.3% in the week, breaking a three week streak of gains. U.S. West Texas Intermediate crude (WTI) futures rose 40 cents, or 0.5%, to US $90.03 a barrel, as U.S. oil rig counts fell. The benchmark fell 0.03% for the week, the first decline in four weeks.

• US natural gas futures fell to below $2.7/MMBtu, after a federal report showed a storage build last week, in line with estimates. According to EIA, US utilities added 64 billion cubic feet (bcf) of gas into storage last week, compared with market expectations of a 67 bcf billion increase.

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National Headlines

• Nigeria’s Interest rate body meeting postponed – Following the appointment of a new board of governors chaired by Yemi Cardoso, a Citi Bank veteran, and the resignations of the four previous deputy governors, the Central Bank of Nigeria’s monetary policy meeting scheduled for today was postponed indefinitely. The transition came at a very critical time for the economy and the CBN. Since the exchange rate reforms of June 14^th , the Naira exchange rate to the US dollar has weakened by about another 25% on top of the 40% devaluation when it moved from N460 to the $ to N750. Meanwhile, the previous board had pursued very rigorous monetary policy orthodoxy to combat inflation. In its last meeting, the monetary policy rate was raised to 18.5%.

• Egypt and IMF agree to merge review – The Arab Republic of Egypt and the International Monetary Fund (IMD) has agreed to merge the first and second review of its US $3 billion extended arrangement agreed December 2022. The first review was supposed to hold in March 2023 and the second this month. Those reviews will now hold together. The IMF support was designed to support macroeconomic stability, reduce inflation, and allow fiscal consolidation. Egypt, like most African economies has faced heightened economic uncertainty following recent global economic shocks. Poverty remains high at near 30%, while unemployment is near 10%. Growth expectation for 2023 is at 4%. Egypt is the largest Africa borrower from the IMF.

• Tall order on SDGs – After the United Nations General Assembly (UNGA) 78^th meeting last week, one of the conclusions was that it will be difficult to meet the Sustainable Development Goals (SDGs) targets set for 2030. The ambitious 17-point Agenda set in 2015 to promote prosperity, address inequalities, while protecting the environment did not envisage the catastrophic global economic crisis that followed Covid – 19 and the geopolitical tensions following the Russia / Ukraine war. Halfway into 2030, the SDG summit 2023 provided initiatives to speed up the success including on energy transition, catalysing global push for transforming education, acceleration on jobs and social protection and inclusive digital infrastructure.

• France to withdraw troops from Niger end of year – President Macron of France says the country will withdraw its troops from Niger at the end of this year. The relationship between France and Niger has deteriorated rapidly since the coup in the African country, Nigeria’s neigbour to the North. First, the French ambassador will leave immediately while the troops will leave end of year. The current Niger authorities welcome the French decision to leave the country. Since the Coup in July, a military intervention by ECOWAS to restore the democratically elected President Bazoum has not been implemented.

Global Headlines

• The strengthened case for freeze on interest rate hikes – The last week surprising drop in inflation in the UK for the third straight month may be the latest in a sign that inflation has peaked in rich countries. For almost two years, developed economies have battled inflation, the type last seen about 40 years ago. Following which interest rates rose considerably. In the UK, following the fall in inflation, the Bank of England left its interest rates unchanged at 5.25%. In the Eurozone, inflation was unchanged in August while it rose to 3.7% in the US but the US Fed held rates steady at 5.25% - 5.50%. In the Eurozone, the European Central Bank raised interest rate to 4% but provided strongest signal yet that it should be enough to combat inflation. All policy boards have one more meeting before the end of the year.

• Age is now a problem in forthcoming US elections – According to a new NBC poll monitored on CNBC, about 75% of US voters surveyed say they are concerned about President Joe Biden’s age ahead of 2024 elections. The poll also shows that the former Republican President Donald Trump is extending his national lead over his rivals in the party, but largely tied with Biden in a hypothetical rematch.