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Satchu's Rich Wrap-Up
Thursday 04th of April 2019

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The Latest Daily PodCast can be found here on the Front Page of the site

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WB Yeats The Second Coming

The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
The best lack all conviction, while the worst
Are full of passionate intensity
Surely some revelation is at hand;
Surely the Second Coming is at hand

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Currency Markets at a Glance WSJ
International Trade

Euro 1.1240
Dollar Index 97.047
Japan Yen 111.386
Swiss Franc 0.9986
Pound 1.3185
Aussie 0.7117
India Rupee 68.8605
South Korea Won 1136.16
Brazil Real 3.8701
Egypt Pound 17.3247
South Africa Rand 14.1972

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The state of the continent is good.Dr. Akinwumi A. Adesina, President African Development Bank Group @AfDB_Group #2019AEO

Africa’s general economic performance continues to improve, with gross
domestic product growth reaching an estimated 3.5 percent in 2018,
about the same as in 2017 and up 1.4 percent- age points from the 2.1
percent in 2016. Looking forward, African economic growth is projected
to accelerate to 4 percent in 2019 and 4.1 percent in 2020. While
higher than that of other emerging and developing countries, it
remains insufficient to address the structural chal- lenges of
persistent current and fiscal deficits and debt vulnerability. The
challenge is thus twofold: to raise the current growth path and to
increase the efficiency of growth in generating employment. However,
African economies have deindustrialized. Although structural change is
occurring, it has been through the rise of the services sector, which
has been largely dominated by informality, low productivity, and an
inability to create quality jobs. To avoid the informality trap and
chronic unemployment, Africa needs to industrialize and add value to
its abundant agricultural, mineral, and other natural resources.  A
borderless Africa is not just a political ideal. It would lay the
foundation for a competitive continental market to accelerate growth
and allow Africa to be more competitive in global trade and value

Africa’s economic growth continues to strengthen, reaching an
estimated 3.5 percent in 2018, about the same as in 2017 and up 1.4
percentage points from the 2.1 percent in 2016.

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Africa's average inflation fell from 12.6 percent in 2017 to 10.9 percent in 2018 and is projected to further decline to 8.1 percent in 2020. #2019AEO @AfDB_Group

Double-digit inflation occurs mostly in conflict-affected countries
and countries that are not members of a currency union. Inflation is
highest in South Sudan, at 188 percent, due to the lingering economic
crisis. Inflation is lowest, at 2 percent or less, in members of the
Central African Economic and Monetary Community and the West African
Economic and Monetary Union and particularly in members of the CFA
zone because of its link to the euro.

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By the end of 2017, the gross government debt- to-GDP ratio reached 53 percent in Africa, but with significant heterogeneity across countries. #2019AEO @AfDB_Group

Of 52 countries with data, 16 countries—among them Algeria, Botswana,
Burkina Faso, and Mali —have a debt-to-GDP ratio below 40 percent;
while 6 countries—Cabo Verde, Congo, Egypt, Eritrea, Mozambique, and
Sudan—have a debt- to-GDP ratio above 100 percent. The traditional
approach to estimating debt sustainability classifies 16 countries in
Africa at high risk of debt dis- tress or in debt distress. Even so,
while debt vulnerabilities have increased in some African countries,
the continent as a whole is not exposed to a systemic risk of debt

Africa’s current external deficits may be justified if they sow the
seeds for future surpluses.

Clouding the macroeconomic forecasts for Africa are several risks.

First, further escalation of trade tensions between the United States
and its main trading partners would reduce world economic growth, with
repercussions for Africa.
Second, costs of external financing could further increase if interest
rates in advanced coun- tries rise faster than assumed.
Third, if African countries are again affected by extreme weather
conditions due to climate change, as they have been in recent years,
agri- cultural production and GDP growth could be lower than
Fourth, political instability and security prob- lems in some areas
could weaken economies.

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Africa's working-age population is projected to increase from 705 million in 2018 to almost 1.0 billion by 2030. #2019AEO @AfDB_Group

As millions of young people join the labor market, the pressure to
provide decent jobs will intensify. At the current rate of labor force
growth, Africa needs to create about 12 million new jobs every year to
prevent unemployment from rising

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it is clear that Africa has the highest rate of estimated informality in the world, at 72 percent of nonagriculture employment-and as high as 90 percent in some countries. #2019AEO @AfDB_Group

Furthermore, there is no evidence that informality is declining in Africa.

Growth acceleration episodes are also associated with a rise of
employment in the mining sector (10 of 20 episodes), confirming the
specific role of the extractive sector in Africa.

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About 40 percent of African countries are projected to see growth of at least 5 percent in 2019, while about 25 percent are projected to see growth of less than 3 percent. #2019AEO @AfDB_Group

While the recovery from the 2016 trough is good news for Africa, the
projected medium-term growth of 4 percent is insufficient to make a
dent in unemployment and poverty. Population growth of more than 2
percent implies that GDP per capita will increase less than 2 percent,
 leaving convergence with middle- and high-income economies slow to
materialize. And the growth path is insufficient to create enough jobs
for the growing labor force. The working-age population is projected
to increase an average of 2.75 percent a year between 2016 and 2030.3
Assuming average employment-to-GDP elasticity of 0.4,4 economic growth
of 6.9 percent a year is required just to absorb new entrants to the
labor force, far above the highest growth rate attained in this
decade. Even with employment-to- GDP elasticity of 0.6, growth would
need to exceed 4.6 percent a year to stabilize the unemployment rate
(figure 1.2). The challenge is thus twofold: to raise the current
growth path and to increase th

At the country level, slow growth in Nigeria and South Africa is
dampening Africa’s average growth. They account for a large share of
Africa’s GDP but only 0.2–0.4 percentage point of Africa’s GDP growth
(figures 1.6 and 1.7). #2019AEO @AfDB_Group


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Egypt, the third largest African economy, accounts for more than 1 percentage point of Africa's growth. #2019AEO @AfDB_Group

Fiscal deficits are expected to remain at 10 percent of GDP or higher
in Burundi, Djibouti, Eritrea, and Zimbabwe and at 5–10 percent in
Comoros, Egypt, Mozambique, eSwatini, and Zambia.

Domestic resource mobilization has improved but falls short of the
continent’s developmental needs. The average ratio was about 17
percent in 2017, below the 25 percent needed to finance development
objectives But there is wide variation across countries, from 2.8
percent in Nigeria to 31 percent in Seychelles and 36 per- cent in

Remittances increased from $62 billion in 2016 to almost $70 billion
in 2017. Nigeria has the largest inflow of remittances. Among smaller
countries, remittances are particularly large in Senegal, Tunisia, and
Uganda. In Senegal remit- tances amounted to about 10 percent of GDP

In 2017, Africa’s gross government debt–to-GDP ratio reached 53
percent, with considerable heterogeneity across countries countries
with data, 16 (including Algeria, Botswana, Burkina Faso, and Mali)
have a debt-to-GDP ratio below 40 percent, and 6 (Cabo Verde, Congo,
Egypt, Eritrea, Mozambique, and Sudan) have a ratio above 100 percent.
The International Mone- tary Fund Debt Sustainability Approach
classifies 16 countries as being at high risk of debt distress or in
debt distress. While debt vulnerabilities have increased in some
countries, the continent as a whole does not face the systemic risk of
debt crisis.

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The composition of debt in Africa has shifted away from official and concessional foreign debt toward commercial debt, which has greater service costs. #2019AEO @AfDB_Group

External debt service as a proportion of exports increased from 5
percent in 2013 to 10 percent in 2016 (the most recent year with

Countries with rising urbanization and industrial- ization rates
include several export diversification success stories: from 2012 to
2016, Cabo Verde’s urbanization rate went up 11 percentage points, to
66 percent, and Tanzania’s went up 9. Some countries, however,
witnessed an urbanization decline—for example, Zimbabwe (from 35
percent in 2002 to 32 percent in 2016).

Such a generally positive assessment of Afri- can monetary unions has
drawn skepticism from other researchers and several criticisms can be
leveled against the optimal currency area theory

there are indications that Africa is experiencing premature deindustrialization

Overall, the analysis reveals little firm dynamism in Africa,
particularly for small firms’ chances of transitioning into medium and
large firms.

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SSA Economist has also got to be an accomplished Meteorologist because Rains have an outsize effect on GDP

African youth demographic [many characterise this as a ‘demographic
dividend’] – which for Beautiful Blaise turned into a demographic
terminator –

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Africa Growth at 7-Year High, No Thanks to Its Major Economies @economics

Growth in Africa’s two largest economies may be sputtering along but
that won’t stop the continent’s gross domestic product from expanding
at the fastest pace since at least 2012.
GDP growth for the continent is forecast accelerate to 4 percent this
year, up from an estimated 3.5 percent in 2018, making it the
fastest-growing region in the world after Asia, according to the
African Development Bank.
And that’s despite Nigeria and South Africa, which make up almost half
of the continent’s GDP, “pulling down Africa’s average growth,” as the
Abidjan-based lender said in its latest economic outlook report
Nigeria’s GDP will expand by 2.3 percent in 2019, which is below the
rate of population growth, as the government struggles to reduce the
nation’s oil dependence and attract foreign investment.
South Africa’s expansion will be even slower, at 1.7 percent, as the
continent’s most-industrialized economy battles to recover from last
year’s recession. Both countries are in the AfDB’s list of 10
slowest-growing economies.
While the powerhouses in western and southern Africa struggle to gain
meaningful momentum, the continent’s economic growth will once again
be driven by East Africa, which will be the fastest-expanding region
for the fifth straight year.
Ethiopia, Kenya, Rwanda and Tanzania all feature on the AfDB’s list of
10 fastest-growing economies for 2019. Egypt, the biggest economy
after Nigeria and South Africa, will also help drive growth.
Output in the Arab world’s most-populous country will rise around 5.5
percent this year as the government’s structural reforms attract more
Subdued growth in southern Africa is due to South Africa’s weak
output, which affects neighboring countries, the AfDB said.
While West Africa’s prospects are more upbeat, they may be clouded by
risks including uncertainty in global commodity prices and security
concerns in some countries, the lender said.

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Ethiopia's Abiy Marks One Year With Record $13 Billion Inflows @bpolitics

Ethiopian Prime Minister Abiy Ahmed attracted a record $13 billion of
inflows in his first year in office, as he moves to reform the
nation’s economy by allowing in foreign capital.
The funds, some from the World Bank, come as the Horn of Africa
country seeks to plug a funding gap that the International Monetary
Fund has said poses risks to the nation’s medium-term outlook.
It’s the first time Ethiopia has recorded such inflows in more than a
century, according to Abiy.
“In the past seven months alone, through investments, loans, grants,
remittances and services, we brought $13 billion,” Abiy said Tuesday
in a televised address without giving full details on sources of the
“If we didn’t do this, it would’ve been impossible to get out of our troubles.”
Africa’s fastest growing economy, according to IMF data, needs to
refinance maturing debt, fund infrastructure projects, pay wages and
boost foreign-currency reserves, Abiy said in a separate address last
The IMF in December estimated Ethiopia’s public debt would be 57.2
percent of gross domestic product for the fiscal year ending July 7
and the current-account deficit at 6.2 percent of GDP.
“While debt is sustainable in the medium term, Ethiopia remains at
high risk of debt distress,” the Washington-based lender said at the
Abiy, who marks one year in office this week, has made rapid changes
to the country’s once tightly regulated political and economic space.
The ruling politburo has announced plans to open up state-owned
industries, from telecommunications to sugar and power generation, to
foreign investors.
In February, he said the government had rescheduled 60 percent of its
loan repayments to 30 years from 10 years.
Costs for the much-delayed Grand Ethiopian Renaissance Dam, initially
estimated at 80 billion birr ($2.8 billion), could rise by about 60
State-owned Ethiopian Electric Power Corp. holds more than 300 billion
birr of debt, equal to 99 percent of its capital, meaning that should
the state-owned company be sold, the nation would get only a 1 percent
stake, according to Abiy.
Funding includes financing from the World Bank, and earlier, the Abu
Dhabi Fund for Development that allocated an 11-billion dirham ($3
billion) economic aid package in June last year.
Besides the economy, Abiy took steps to boost diplomatic relations,
including ending decades of enmity with neighboring Eritrea. At home,
he pledged to open up political space, freed prisoners, and allowed
opposition parties to express themselves.
The country is scheduled to hold general elections next year, which
Abiy pledged will be democratic, while warning the more than 100
political parties to operate within the law.
“Whoever wants to be elected needs to be registered, be ready to
compete and let the election committee hold the elections,” he said.
The nation’s lawmakers indefinitely postponed plans for a census
before the election. The last count was conducted in 2007, and
Ethiopia ranks as Africa’s second-most populous nation with 105
million people.

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02-JUL-2018 :: Ethiopia Rising.

Abiy Ahmed Ali (Amharic: , Or omo: Abiyyi Ahimad Alii; born 15 August
1976) was appointed the 12th Prime Minister of Ethiopia on 2 April
He grew up in a Muslim family (Ah- med Ali, his Oromo father; Tezeta
Wolde, his mother) and with Oromo Muslim and Christian grandparents.
He is evidently a Virilian and Gladwellian Figure.
“To create one contagious movement, you often have to create many
small movements first.” “Look at the world around you. It may seem
like an immovable, implacable place. It is not, With the slightest
push—in just the right place—it can be tipped.”—Malcolm Gladwell .

He has been Prime Minster for 90 days. During those 90 days, he has
criss-crossed the country, ended a state of emergency, released
thousands of political prisoners, thawed relations with Eritrea [29
Mar 2018 HE Abiy Ahmed @PM_AbiyAhmed - It is time.
Lets build a wall of love between #Ethiopia & #Eritrea], bagged a $1b
from the UAE, announced a dramatic economic about-turn.

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In matters language and linguistics, he has tapped into a "Nelson Mandela" 1994 mood.

These 90 or so days represent the most consequential arrival of an
African politician on the African stage since Mandela walked out of
prison blinking in the sunlight and constructed his ‘’rainbow
nation’’. I was watching the France-Argentina game and the arrival of
Kylian Mbappe on the world stage at the tender age of 19. I recalled
watching the Whirling Dervishes of the Mevlevi order on a night of a
full moon in Konya, Turkey. I thought what they all have in common
with Abiy Ahmed. It’s all about speed and velocity. Paul Virilio terms
it ‘dromology’, which he defined as the “science (or logic) of speed“.
He notes that the speed at which something happens may change its
essential nature, and that which moves with speed quickly comes to
dominate that which is slower.

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"Whoever controls the territory possesses it. Possession of territory is not primarily about laws and contracts, but first and foremost a matter of movement and circulation."

Virilio argues that the traditional feudal fortified city disappeared
because of the increasing sophistication of weapons and possibilities
for warfare. For Virilio, the concept of siege warfare became rather a
war of movement.
Abiy Ahmed has moved at lightning speed, the old guard is like ‘’the
traditional feudal fortified city’’.
He said “The ppl of Tigray are still begging for a drop of water; TPLF
(the party) is not the people of Tigray”.

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Of course, the downside risk of all this infrastructure is plain to see and Sri Lanka and the tale of its Hambantota Port is now a cautionary Tale.

FX reserves were at less than a month’s worth of imports and something
needed to be done. Expectations are high.

The Prime Minister needs to execute real quick on the economic front
but if he levels the playing Field, a whole Troop of folks will be
looking to pile in. That Troop will include the Ethiopian Diaspora,
Foreign Investors and I am sure our very own Safaricom who must have
already presented the Prime minister with a copy of the MIT research
on M-Pesa which con- firmed access to mobile-money services increased
daily per capita consumption levels of two percent of Kenyan
households, lifting them out of extreme poverty. Abiy Ahmed’s first 90
days have been as remarka- ble as the less than 90 minutes of France’s
Mbappe’s performance on Saturday.

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.@IMFNews Says Nigerian Growth Too Slow, Calls for Single Naira Rate

The International Monetary Fund said Nigeria’s economy was growing too
slowly to reduce poverty or joblessness and urged the government to
boost revenue and scrap its system of multiple exchange rates.
“Growth is not enough,” Amine Mati, the IMF’s mission chief for
Nigeria, said in an interview in Lagos on Wednesday as the
Washington-based lender released its latest Article IV report for
Africa’s biggest oil producer.
“Our number-one recommendation is to get the revenue ratio up. It
would increase the government’s resources and ability to spend on
infrastructure. Total spending in the economy is not high enough. To
ensure you get long-term investment coming in, you also need to unify
the exchange rate.”
The economy is recovering from the 2014 crash in crude prices and the
IMF forecasts that growth will accelerate to 2.1 percent this year
from 1.9 percent in 2018. That would still leave it as one of Africa’s
least buoyant economies and will be below the rate of population
growth, which is about 3 percent.
Part of the problem is the government’s low tax base, which hinders
its ability to boost demand through spending. Its ratio of revenue to
gross domestic product is one of lowest in the world and will fall to
7 percent in 2019 from 8 percent last year, the IMF said in the
Article IV report.
Nigeria needs to “urgently” implement structural reforms that would
help diversify the economy away from oil, the IMF said.
As well as boosting revenue and easing restrictions on businesses
buying foreign exchange, these include increasing gasoline and
electricity prices and making state-owned companies more efficient,
the lender said.
“Under current policies, the outlook remains muted,” it said in the
report. “Over the medium term, absent strong reforms, growth would
hover around 2.5 percent, implying no per-capita growth as the economy
faces limited increases in oil production and insufficient adjustment
four years after the oil price shock.”

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"Baba Go Slow" has to be contrasted with President Al-Sisi's Egypt. Al-Sisi made bold moves when it came to the Economy. Egypt devalued its currency early now reaping the dividend from its bolder economic policy

"Baba Go Slow" has to be contrasted with President Al-Sisi's Egypt.
Al-Sisi made bold moves when it came to the Economy. Egypt devalued
its currency early but is now reaping the dividend from its bolder
economic policy

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Kenya private sector expansion slowest in 16 months in March -PMI @ReutersAfrica
Kenyan Economy

The pace of activity in Kenya’s private sector edged lower in March to
its softest in 16 months, a survey showed on Wednesday.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for
manufacturing and services fell to 51.0 from 51.2 in February. Any
reading above 50 indicates growth.
“The drop in the PMI doesn’t really come as a surprise as agricultural
productivity is usually weaker in the first quarter,” said Jibran
Qureishi, regional economist for East Africa at Stanbic Bank.
“As the long rains commence probably from April, higher output from
the agriculture sub-sector is likely to underpin private sector

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by Aly Khan Satchu (www.rich.co.ke)
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April 2019

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