VenturesNow

Ghana’s struggling local bond market clouds economic recovery

Published

2 weeks ago

November 27, 2024

Two years after a devastating economic crisis forced it into default, Ghana’s economy is expanding once more, but the effects of a local debt restructuring are threatening its longer-term recovery.

The local bond market was so severely damaged by the reorganisation, which was unprecedented on the African continent, that the government was compelled to rely increasingly on short-term, more expensive Treasury bills and private placements.

Investors are concerned about the reliance on relatively costly short-term finance. Additionally, six experts and investors told Reuters that the sustainability of government debt is further raised by private placements, whose pricing is sometimes opaque.

According to the individuals, the government may have trouble attracting purchasers when it attempts to access local markets for longer-term borrowings the following year.

“There’s little appetite whatsoever to gamble in (government debt) no matter how high or compensatory the rates are,” said Daniel Ankomah, Chief Investment Officer with Accra-based SAS Investment Management.

“It’s a market confidence thing and it’ll take a while alongside the economic recovery. To come back to where we were, we may need a decade or more.”

A further concern is the elections scheduled for December 7, which will choose Ghana’s next president. Investors are suspicious of the leading candidate’s spending pledges and are concerned about the government’s propensity to spend heavily to entice votes.

Despite the agony, Ghana’s finance minister claimed that the bond restructuring had made the debt sustainable again.

“We anticipate re-entering the domestic bond market in 2025, following a two-year hiatus,” it said in written response to Reuters

It further stated that the timetable was normal and that “an improved macroeconomic environment, specifically inflation,” was probably helping.

The IMF also stated that the temporary reliance on T-bills was anticipated and that continued fiscal tightening would reduce funding needs. The IMF’s debt sustainability evaluations calculate the amount of assistance required to get nations back on track.

“These developments are anticipated to enhance confidence in government securities and facilitate a gradual extension of their maturity profile over time,” it said in a statement.

Since domestic pension funds, banks, and people depend on them for funding when outside markets are too costly, governments that restructure debt usually protect them from losses. However, Ghana’s massive national debt prevented such a strategy.

VenturesNow

Egypt’s November inflation drops to 25.5%, near 2-year low

Published

1 day ago

December 11, 2024

Ifeoluwa Dada

According to figures released Tuesday by statistics agency CAPMAS, Egypt’s annual urban consumer price inflation rate fell more than anticipated to 25.5% in November, the lowest level since December 2022.

Following the Russian invasion of Ukraine, which caused international investors to pull billions of dollars out of Egyptian treasury markets, inflation started to rise sharply in early 2022.

In September 2023, headline inflation reached a record high of 38.0%. It dropped to 26.5% by October 2024.

In a Reuters survey last month, 15 economists’ consensus prediction was for annual inflation to gradually decline to 26.4%.

According to CAPMAS statistics, headline inflation decreased from 1.1% in October to 0.5% in November every month.

Compared to October, when they fell 1.1%, food costs fell 2.8% over the month, making them 23.3% more than they were a year ago.

An increase in the money supply has been a major contributor to inflation. According to central bank data, Egypt’s M2 money supply increased by 29.54% in October compared to the same month last year.

VenturesNow

Nigeria creates N20bn consumer credit fund for domestic automakers

Published

3 days ago

December 9, 2024

Ifeoluwa Dada

In an attempt to increase demand for cars built domestically, the Nigerian government has established a N20 billion consumer credit facility programme.

The goal of the programme, which is run by the Nigerian Consumer Credit Corporation (Credicorp), is to keep customer interest rates to single digit.

The fund aims to remove obstacles that consumers face when purchasing cars on credit, according to Credicorp Managing Director/CEO Engr. Uzoma Nwagba, who spoke at the official launch/agreement signing between Credicorp and the National Automotive Design and Development Council (NADDC) in Abuja.

Nwagba said that the credit economy contributed to the creation of jobs and wealth for Nigerians as well as to the enhancement of residents’ quality of life.

According to him, the government is dedicated to helping the industry in order to guarantee its expansion and survival. According to him, the N20 billion fund was only the start, and if the initial support proves effective, the government intends to create a larger fund.

Earlier, Mr. Joseph Osanipin, the Director General of NADDC, stated that the industry’s expansion depends on the demand side of the car market being improved.

According to Osanipin, credit programs enable consumers to acquire brand-new cars of their choosing, but in the majority of prosperous nations, people do not pay cash for cars and other autos.

According to him, the program, which covers all types of autos such cars, vans, tricycles, and motorbikes, is available to all Nigerians and involves automakers that produce or assemble their goods entirely domestically.