Africa

Ghana’s eurobonds sank to the lowest level in nearly three months after the country missed a self-imposed deadline to restructure its bilateral debt and S&P Global Ratings warned that bondholders face larger losses than anticipated, Bloomberg News reported. Finance Minister Ken Ofori-Atta wanted to reach a restructuring agreement with bilateral creditors by the end of February to help qualify for a $3 billion International Monetary Fund program. So far, Ghana has only partially completed the domestic-debt part of the exchange plan.

South Africa and Nigeria have been placed on a global financial watchdog’s so-called gray list denoting nations with shortcomings in tackling illicit financial flows, a move that scars their international reputations and may raise costs for banks and asset managers, Bloomberg News reported. The decisions were announced by the Financial Action Task Force on Friday. While South Africa’s inclusion on the list was widely flagged as a risk, the possible addition of Nigeria attracted little attention. Morocco and Cambodia were taken off the list after improving their controls.

South Africa is offering a total of 13 billion rand ($710 million) in tax incentives to businesses and individuals to encourage investment in renewable energy projects and offset the impact of higher fuel and food prices, Bloomberg News reported. Africa’s most industrialized economy is experiencing its worst bout of power rationing yet, with outages occurring for more than 200 days in 2022 and every day this year, because the state power utility can’t meet demand from its old and poorly maintained plants.

A shuttered South African airline sued Boeing Co. for fraud over its agreement to buy eight 737 MAX planes and seeks damages of at least $83 million, Reuters reported. Boeing "placed profits over safety and led with a plan of deception," Comair's suit filed Monday in U.S. District Court in Seattle said. Boeing declined to comment. Comair said that Boeing committed fraud over its failure to disclose problems with a key flight control system tied to two fatal 737 MAX crashes in 2018 and 2019 in Indonesia and Ethiopia that killed 346 people and led to the MAX's 20-month grounding.

Ghana plans to convert an estimated 40 billion cedis ($3.3 billion) of loans owed to its central bank into bonds, making it the single biggest holder of domestic government securities and exposing it to an ongoing debt restructuring, Bloomberg News reported. The bonds, due to be issued by the finance ministry, will also cover interest owed to the Bank of Ghana, said the people, who asked not to be named because they’re not authorized to speak publicly on the matter.

Zimbabwe's central bank has cut its policy rate by 50 percentage points to 150%, it said in a statement on Thursday, driven by a downward trend in inflation since late last year, Reuters reported. Monthly inflation fell to 1.1% in January from 2.4% in December, while yearly inflation dipped to 229.8% from 243.8%. "The moderation in interest rates is important and necessitated by the downward trend in the month-on-month inflation since the last quarter of 2022," said the bank, adding it expects the trend to continue into 2023.

Kenya's central bank held its benchmark lending rate steady at 8.75% on Monday, its monetary policy committee said, saying its last hike in November was still working its way through the economy, Reuters reported. Six out of nine market participants polled by Reuters had predicted the bank would hold the rate steady, while three expected it would be raised. The move bucks the trend among major African central banks who have maintained a tightening stance into this year. Policymakers in Nigeria and South Africa hiked rates last week, while their Ghanaian counterparts hiked earlier on Monday.

Nigeria’s sovereign-risk premium jumped the most in three months on Monday after Moody’s Investors Service downgraded the country deeper into junk, Bloomberg News reported. The extra yield investors demand to own the West African country’s dollar debt rather than Treasuries widened 49 basis points to 780, according to JPMorgan Chase & Co. data. The rate on the nation’s 2032 bonds jumped 56 basis points to 12%, also the most since October. Forward contracts on the currency traded 28% weaker than the official rate on the one-year tenor.

Nigeria's central bank on Tuesday raised its benchmark lending rate by 100 basis points to 17.5%, as monetary authorities seek to rein in inflation without choking off lending to the private sector, Reuters reported. Nigerians will head to the polls on Feb. 25 to choose a successor to President Muhammadu Buhari and the state of the economy is a major issue for voters grappling with double-digit inflation. The central bank's decision came after inflation dipped for the first time in 11 months in December to 21.34%, compared with 21.47% in November.

Zambia's official sector creditors met on Thursday to discuss the type of debt relief to offer the country, Finance Minister Situmbeko Musoktwane told Reuters. Zambia became the first African sovereign default in the COVID-19 era in late 2020 and has been struggling to restructure debt that reached 133% of GDP at the end of 2021, which analysts have blamed partly on the high number and diversity of creditors.