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Zambia’s kwacha now Africa’s best performing currency as Rand, Naira, others struggle

Published

9 months ago

February 23, 2024

Following consistent drastic monetary policy interventions by its central bank, Zambia’s currency, the kwacha, has become Africa’s best-performing currency against the US dollar thus far this year.

However, analysts suggest the currency will only many its steady rise if the nation draws in more foreign investment.

According to data from the London Stock Exchange Group (LSEG), the kwacha has strengthened 13.8 percent to 22.8 percent versus the US dollar in 2024 as a result of the central bank’s decision to reverse a decline in the value of the currency that had increased inflation earlier this month by raising interest rates and reserve ratios for commercial banks.

Danny Greef, Co-Head of Africa at research firm ETM Analytics noted that “The kwacha’s performance this year has been remarkable.”

Zambian authorities have held foreign investment at bay, and the value of the kwacha is decreasing due to the country’s unfinished debt restructuring, which is in its fourth year. Although copper production, the country’s major foreign exchange earner, has also fallen despite government efforts to boost the sector.

“The conclusion to the external debt restructuring exercise will also be instrumental to providing clarity on the outlook for hard-currency and fiscal obligations and unlock pent-up portfolio- and fixed investment flows into the country.”

Bank of Zambia governor Denny Kalyalya told a public forum earlier this week that “The measures that we have taken… are meant to stem some of the demand, which we thought was excessive as we anticipate supply, which mainly comes from the mining sector.”

Although the value of the kwacha has somewhat declined this week from 22.5 to $1, it is still more than 20% higher than the record low of 27.23 achieved on February 6.

“What is expected is an adjustment that will stabilise around the 21-22 per dollar,” economist Munyumba Mutwale said, adding that increased foreign currency flows were required for the kwacha to make further gains.

African currencies encountered severe difficulties in 2023 as a result of the global monetary tightening cycle. The official exchange rates of the South African rand, Kenyan shilling, and Nigerian naira had significant fluctuations in December 2023, falling by an average of 27% from 25% in November.

Although the three countries’ currencies have continued to decline, as has the value of other continental economic giants like Egypt, it seems Zambia has managed to stabilise its economy in spite of its foreign debt issues.

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VenturesNow

Food prices drive second straight monthly hike in Nigeria’s inflation

Published

3 days ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

VenturesNow

MTN financial report reveals drop in group service revenue

Published

3 days ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.