🔅The rise of interest rates.
African countries are suffering as a result of rate hikes in the United States.
🔅 Good morning,
In today’s issue, Nigeria and Kenya are expected to raise rates to deal with inflation. But Ghana will hold still, even as they seek money from the IMF…
Markets Today*
📈 Nigerian Stock Exchange: 49,218.35 (+0.39%)
📈 Johannesburg Stock Exchange: 12,516.55 (+0.34%)
📉 Nairobi Securities Exchange: 134.86 (-0.07%)
📉 US S&P 500: 3,663.60 (-0.80%)
📉 Shanghai Composite: 3,051.23 (-1.20%)
*Market data accurate as of close of markets the previous day.
Following the pound's record low against the US dollar, the Bank of England and the Treasury have both sought to reassure investors. If necessary, the Bank said it will not hesitate to raise interest rates to combat inflation at its November meeting.
Nigeria and Kenya are expected to raise interest rates in the next few days, following months of rate increases from other African central banks to try to calm high inflation. Ghana is expected to remain silent. Dollar shortage is fuelling inflation, and countries are suffering as a result of rate hikes in the United States, which have drained away greenbacks and weakened native currencies.
ECONOMY
Nigeria’s economy is in a state of instability — World Bank
According to a World Bank assessment, Nigeria's economy is now vulnerable to causes outside its control.
Despite an economic recovery from the Covid-19 recession, the bank highlighted that Nigeria's economic potential to attract domestic and global investment is eroding, and that the country's welfare is deteriorating.
The private sector’s contribution to GDP has decreased as a result of macroeconomic and financial policies that limit exports and foreign investment.
The report emphasized that the country's foreign exchange management regime must become more flexible and transparent, that revenue-based fiscal consolidation must be accelerated, that expenditure and debt management must be strengthened, and that the business environment must be improved.
ACROSS THE CONTINENT
Other Headlines
🇳🇬 Nigeria's national electricity grid collapsed on Monday, leaving several regions without power. The grid has failed at least four times this year, which authorities attribute to technological issues. Nigeria has an installed capacity of 12,500 megawatts but only produces about a fifth of that, forcing many Nigerians and businesses to rely on diesel generators. Diesel prices have risen dramatically since the beginning of the year.
🇿🇦 South Africa's rand fell to a 28-month low, joining other weakening emerging market currencies as the US dollar continued to rise as a result of the Federal Reserve's interest rate rises. The rand, like most emerging market currencies, is highly vulnerable to global forces such as US monetary policy.
🇬🇠This week, an IMF staff team will visit Ghana to continue discussions with the government about reforms that could be supported by an IMF funding arrangement. Ghana sought assistance from the IMF in July after its balance of payments deteriorated and hundreds went to the streets to protest economic hardship. The administration has been working hard to rein in spiralling inflation, cut public debt, and strengthen the local currency. Its current account deficit grew to about $2.5 billion at the end of June, up from around $935 million in March.
AROUND THE WORLD
Mistakes in military call up declaration
In the face of mounting public criticism, the Kremlin has confessed that mistakes were made in its effort to mobilize Russian army reservists to fight in Ukraine.
On September 21, President Putin announced a "partial mobilization," with Defense Minister Sergei Shoigu subsequently suggesting 300,000 reservists will be called up.
According to estimates in opposition Russian media, up to one million people could be called up, pointing out that one phrase believed to be about the actual number of required reservists was deleted in the published version of Mr Putin's directive on the Kremlin website.
According to a number of military analysts in the West and Ukraine, Mr. Putin's decision to activate reservists demonstrates that Russian troops are failing miserably on the battlefield in Ukraine.
More than 2,000 people have been detained during protests around Russia since the mobilization announcement.
Dmitry Peskov, Mr. Putin's spokesperson, admitted that mistakes were made, but he was unaware of any intentions to close Russia's borders and implement martial law in the country.
Earlier reports stated that this could be done to prevent potential recruits from fleeing abroad.
FOOD FOR THOUGHT
Proverb of the Day
"A low-class man will just talk; deeds are the hallmark of a gentleman."
- Swahili Proverb.