Nigeria, SA likely out of recession

Africa’s two biggest economies likely emerged from a recession in the second quarter but strong growth won’t show until business confidence is restored, a Reuters poll suggested on Friday.

Nigeria and SA have both benefited from a recovery in commodity prices since early 2016, though not as much as China, the US and the euro zone.

“Both countries have bounced off the bottom, but the sustainability is in question. Nigeria needs a single FX policy and SA needs more policy certainty,” said AlyKhan Satchu of Rich Management in Nairobi.

Nigeria had been in recession since late 2015, while SA confirmed a technical recession in the first quarter of this year. A Reuters poll showed Nigeria’s economy broke out of a long slump in the second quarter with a median forecast for 1.55% year-on-year (y/y) growth, while SA quit shrinking with 2.2% quarter-on-quarter growth.

“We expect a return to positive y/y growth in Nigeria, helped by improved foreign exchange availability and a recovery in oil production,” said Razia Khan of Standard Chartered.

Nigeria has suffered from dollar shortages and falling commodity prices that have affected Africa’s major crude exporters. The crisis was exacerbated by limits on what citizens can import, as authorities try to stop the naira sliding. However, Gaimin Nonyane at Ecobank expects the positive growth trajectory to be maintained for the foreseeable future, as long as forex market liberalisation continues and assuming oil prices remain at current levels.

In SA, the normally reliable trade, catering and accommodation sector was the worst performer in the first quarter, contracting 5.9%, while the key manufacturing sector shrank 3.7%. “Recovery in manufacturing in the second quarter should help drive a quarter-on-quarter acceleration, but growth is expected to remain weak overall,” said Khan.

Agriculture should lift growth but other sectors are likely to only see negligible growth as confidence lags, he added. – Reuters

Moneyweb

The Bank of Baroda South Africa (BOB) flouted a range of anti-corruption and money laundering laws to help the Gupta family buy the Optimum Coal mine in March 2016.

This was revealed in documents compiled by Deloitte (appointed by the SA Reserve Bank), following an investigation into deposits into the Gupta-owned Tegata bank account at BOB, which ultimately saw the family acquire Optimum for R2.15 billion.

Deloitte found BOB contravened several provisions in the Financial Intelligence Centre (FIC) Act related to the bank’s total lack of verification of the identities and source of funds of the deposits.

Subsequently, the FIC levied a R11-million fine.

We expect a return to positive y/y growth in Nigeria, helped by improved foreign exchange availability and a recovery in oil production.

Razia Khan Standard Chartered