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Despite Q1 GDP growth, inflation hits 5 years high at 6.5% in South Africa

Published

11 months ago

June 23, 2022

Inflation rate in South Africa jumped to 6.5% in May of 2022, from 5.9% in April and March, exceeding the central bank’s stated target.

Official data released on Wednesday revealed that the rise is the highest in five years above market expectations of 6.2%.

The new inflation figures are a sharp contrast to the report South Africa’s economy growth which has seen its ) expand by 1,9% in the first quarter of 2022, representing a second consecutive quarter of upward growth. The size of the economy is now at pre-pandemic levels, with real GDP slightly higher than what it was before the COVID-19 pandemic.

South Africa’s central bank had set its inflation target range at 3−6%. The country formally introduced inflation targeting in February 2000, a framework in which the central bank uses monetary policy tools, especially the control of short-term interest rates, to keep inflation in line with a given target.

Excluding energy and food, core inflation also rose to 4.1 percent in May from a year earlier, up from 3.9 percent in April.

The ongoing war between Russia and Ukrain has put lots of strain on many African countries as the two European neighbours contribute significantly to the supply of food to the world. A factor that experts have attributed to be part of the reasons for rise in food inflation in many developing countries.

A similar trend is observed in Nigeria, another Africa’s economic power where official figures in May, 2022 shows that composite food index rose to 19.50 percent on a year-on-year basis.

Inflation refers to the rise in the prices of most goods and services of daily or common use, such as food, clothing, housing, recreation, transport, consumer staples, etc. Inflation measures the average price change in a basket of commodities and services over time.

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Congo DR: President Tshisekedi visits China for mining renegotiations

Published

2 days ago

May 27, 2023

Ifeoluwa Dada

The President of the Democratic Republic of Congo, Félix Tshisekedi is currently on a visit to China to strengthen his country’s partnership with the Asian giant.

An official of Congo DR, Erik Nyindu Kibambe, while addressing journalists in Beijing, revealed that the trip was meant to be for the renegotiation of mining contracts. Kibambe maintained that talks were going “wonderfully.”

The president had previously promised to renegotiate mining contracts, in particular, the one signed in 2008 with China by his predecessor, Joseph Kabila (2001-2019), for better terms in favour of the country.

The president was received by a cheering audience and a line of honour and jubilant children between meetings with Mr Xi and Premier Li Qiang.

Mr. Li told Mr Tshisekedi that he believed “China-DRC relations will surely achieve greater development and benefit both peoples.”

A statement by the Chinese foreign ministry revealed that the countries were upgrading “the bilateral relationship from a win-win strategic cooperative partnership to a comprehensive strategic cooperative partnership.”

Congo is one of the most natural resource-rich nations, holding massive untapped deposits of minerals including cobalt, copper, diamonds and gold amounting to approximately $24 trillion.

China is a major investor in the country where it leads the lucrative mining sector with firms like Sicomines.

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Kenya, IMF agree terms for $3 billion Extended Credit Facility

Published

5 days ago

May 24, 2023

Ifeoluwa Dada

Kenya has reached an agreement that could unlock more than $3 billion of new financing with the International Monetary Fund (IMF).

The international lender and the country said the agreement could help relieve pressure on government finances in East Africa’s largest economy.

The agreement is the fifth review of Kenya’s External Credit Facility and Extended Fund Facility arrangements, an extension of the program and augmentation for access under a 20-month Resilience and Sustainability Facility.

Under the agreement, Kenya will get access to $544 million through the Resilience and Sustainability Facility, which is intended to support climate change adaptation and resilience. A total of $3.5 billion had been committed to funding for Kenya under the three facilities, and its executive board would likely consider the staff-level agreement in July.

The IMF stated that the medium-term outlook for the Kenyan economy remained favourable, although the economy had been strained by a challenging external environment. The IMF maintained that the planned fiscal consolidation was appropriate, while also protecting priority social spending.

“Exchange rate flexibility and proactive monetary policy will remain critical to preserving macroeconomic stability and supporting market confidence against the backdrop of a challenging global economic outlook and continued uncertainty in international financial markets,” IMF said in a statement.

Kenya has insisted that it would not default on its debt repayment obligations despite delayed payment of civil service salaries.

The country in April revealed plans to issue a new Eurobond to manage 2024’s maturity of a Ksh270 billion ($2 billion) 10-year bond.