Market News

Naira Panic Is Over, Nigerian Central Bank’s Cardoso Says - BLOOMBERG

JUNE 25, 2024

Don’t panic. Anymore.

Olayemi Cardoso is pleased with how a rescue job on the Nigerian naira is going. Efforts to revive confidence in the currency seem to be working and the “worst is over,” the central bank chief said in an interview in London.

June has been a month of relative stability, marked by the naira’s smallest 100-day swings since January. That’s despite the inflation rate inching to a 28-year high in May — although an easing in the pace of acceleration suggests it may be nearing a peak.

Since his appointment in September, Cardoso has overseen the liberalization of Nigeria’s exchange rate and steep interest-rate hikes. The naira has slid about 70% against the dollar since June 1 last year, just after President Bola Tinubu took office. That’s brought it closer to the street price and hit consumers hard.

Yet, the reforms are beginning to bring rewards, with dollar inflows reducing buyers’ needs to load up on foreign currency, and that has curbed price distortions. The new-found calm is welcome but needs to last so that companies that have endured months of uncertainty can plan ahead.

There is some reason for optimism.

The government has hinted tariffs will be removed on certain imported food to help drive prices down. Last month, it got a $925 million loan from Afreximbank to boost the supply of hard currency on the local foreign-exchange market and the World Bank has approved $2.25 billion funding to support the economy.

Photographer: Kola Sulaimon/AFP/Getty Images

Still, revenues need to increase and long-promised tax reforms are yet to be implemented, while Cardoso has other fires to extinguish.

A bill in parliament proposing to change the central bank’s law threatens its independence. It “might not stand the smell of best practice,” the governor said.

A return to the unorthodox policies of his predecessor, especially the so-called Ways and Means borrowing – were flatly ruled out.

The former commercial banker believes the naira is undervalued and still has room to strengthen. But, for now, Cardoso is enjoying a mini-victory.

News Roundup

Kenya’s parliament dropped a number of controversial tax proposals even as opposition lawmakers refused to participate in voting for a bill that’s caused street protests. Planned levies on bread, mobile-money transfers and goods including diapers, sanitary pads and rubber tires were dropped. The balloting took place as Kenyan police clashed with protesters and local broadcaster KTN reported at least eight people were killed. Read this explainer on why the tax proposals have pitted his citizens against the International Monetary Fund.

Police fire tear gas in Nairobi on Tuesday.Photographer: Kang-Chun Cheng/Bloomberg

South Africa’s two biggest political parties are nearing agreement on the number of cabinet ministers each would have in their efforts to form a broad coalition government with other smaller parties, sources say. The African National Congress increased its offer to the Democratic Alliance to six posts from an initial three. The make-up of the executive is being closely watched by investors anticipating an acceleration of reforms needed to address the nation’s energy crisis, fix its collapsing ports and railways, and reduce crime and corruption.

Ghana reached an agreement with private creditors to restructure about $13 billion of debt, a key milestone in the West African country’s efforts to overhaul its finances. Investors will forgo some $4.7 billion, while providing cash-flow relief of about $4.4 billion during an IMF loan program. The announcement marks a major step since Ghana suspended payments on external loans and embarked on a debt overhaul in December 2022.

Africa Currency Monitor

The African Union endorsed the creation of a new force to replace more than 13,000 troops due to leave Somalia by the end of the year, amid fears that al Qaeda militants in the country are growing in power. Troops from Kenya, Uganda, Ethiopia, Burundi and Djibouti have fought al-Shabaab since 2006 as the Islamist group tries to overthrow Somalia’s government. The militants have carried out a string of terror attacks in the Horn of Africa country and also in Kenya, killing hundreds of civilians, African troops and US defense contractors.

Recent local elections in Mozambique had been billed as a litmus test for the country’s new voting technology and a preview for the October 2024 presidential election. In the months leading up to the ballot, the government spent millions of dollars on scanners, solar panels, printers for PVC cards, voting software and power banks. Mass registration was pitched as a way to increase electoral transparency. Instead, it came to illustrate how biometric technologies could create new avenues for fixing elections.

Internet investing giant Prosus and its parent Naspers swung their e-commerce business into profit for the first time ever as Fabricio Bloisi prepares to take the reins as chief executive officer in July. The results will give momentum to the new CEO as the group contends with a tough market for internet businesses and the legacy of a complicated structure that stumped Bloisi’s predecessor, Bob van Dijk.

Thank you for your responses to our weekly Next Africa Quiz and congratulations to Altan Ari, Daisy Moraa and Godwin Opurum, the first three people to correctly name Binance as the global company whose executive remains in jail in Nigeria over tax charges laid against the firm.


This website uses cookies We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. We also share information about your use of our site with our social media, advertising and analytics partners who may combine it with other information that you've provided to them or that they've collected from your use of their services
Real Time Analytics