Africa

The bell tolls for the Nigerian economy as the government and its private sector battle a humongous recession considered the worst in 29 years threatens to wipe off millions of jobs in critical sectors, Nigeria Today reported. As at last weekend, the omnious economic headwind had taken its first casualties in the aviation industry when two prominent indigenous airlines, Aero Contractors and First Nation, announced the suspension of scheduled flight operations, thus throwing over 2500 Nigerians into the labour market.

The head of the African Development Bank has urged the continent’s governments to boost tax revenue and steer clear of international borrowing as the region grapples with its worst economic slump in more than a decade. Akinwumi Adesina told the Financial Times that he expected the downturn in Africa, which was triggered by the slump in commodity prices and the slowdown in China, to last for up to another three years.

Chase Bank has received Central Bank of Kenya’s (CBK) approval to start taking fixed deposits and resume lending, CAJ News reported. The move marks a major milestone in the turnaround efforts of the bank signaling that most of the major issues under resolution have been addressed, paving the way for full resumption of banking services to all customers. Kenya Depositors’ Insurance Corporation (KDIC) placed the bank under receivership by in April, with KCB Bank Kenya Limited appointed as the Receiver Manager.

One of the briefest sovereign defaults in history? The Republic of Congo today made a belated but full interest payment on a $478m bond, after mysteriously failing to do so on the due date on June 30, resulting in rating agencies declaring a sovereign default at the end of last month, writes Robin Wigglesworth in New York, the Financial Times reported.

As oil-dependent Nigeria slides towards recession for the first time in more than two decades, the effects of the downturn are being felt across the country — in local markets, factories, government offices and among informal traders, the Financial Times reported. The International Monetary Fund last month sharply slashed its growth forecast for Africa’s largest economy, saying it would contract by 1.8 per cent this year, down from its estimate in April of 2.3 per cent growth for the year.

Mozambique’s central bank raised its key rate by 300 basis points to 17.25 percent, the fourth rate increase this year, as it tries to put a lid on soaring prices in the cash-strapped southern African nation, Bloomberg News reported yesterday. Policymakers also increased the interest rate on the standing deposit facility to 10.25 percent from 7.25 percent, Governor Ernesto Gove said.

South Africa’s central bank stood by its main interest rate Thursday, as the threat of near-recession outweighed intensifying inflation risks facing the continent’s most developed economy, the Wall Street Journal reported today. South African Reserve Bank Governor Lesetja Kganyago said the risks to growth were too great raise the bank’s main “repo” rate above 7.0 percent. Kganyago has raised rates three times in the past year in an effort to curb inflation that has shot above the bank’s 6 percent target ceiling.

Commodities from the developing world worth billions of dollars are being exported illicitly every year through misinvoicing, denying governments revenue that would in many countries exceed their inward foreign direct investment, according to research commissioned by the UN, the Financial Times reported today. Experts believe the majority of misinvoicing, which is recording different values in the exporting and importing countries, is illegal activity, designed to evade tax and foreign exchange payments.

Credit ratings firm Moody’s Investors Service cut Mozambique’s sovereign debt rating to Caa3, one of the lowest rungs on the junk-debt ratings ladder. The firm said it expects a continuing loan restructuring by state-owned company Mozambique Asset Management, or MAM, will be followed by defaults on other government debt. Investors believed Mozambique was poised to resolve its debt troubles as recently as March when Credit Suisse Group AG and VTB Group convinced holders of an $850 million bond to extend their repayment schedule.

South Africa will narrowly avoid slipping into recession this year, the International Monetary Fund said, as lackluster leadership and the global commodity rout drag down a longlisting economy, The Wall Street Journal reported. The IMF said Thursday that Africa’s most developed economy will expand just 0.1% this year, down from its previous forecast for a 0.6% expansion. Growth of just 1.1% in 2017 will do little to make up for the a multiyear slump that pushed unemployment and the current-account deficit to record highs.