Economy
Rwanda’s Economic Performance Remains Strong—IMF
By Modupe Gbadeyanka
An International Monetary Fund (IMF) team, led by Laure Redifer, visited Kigali from October 19-November 2, 2016 to carry out discussions with the Rwandan authorities on the sixth review of their economic and financial program supported by the IMF’s Policy Support Instrument (PSI), and the first review of policies supported by the IMF’s Stand-by Credit Facility (SCF).
At the end of the review, Ms Redifer rated the country’s economic performance strong, with a GDP growth of 6.5 percent in the first half of 2016.
“The IMF team reached staff-level agreement with the government, subject to approval by IMF Management and the Executive Board, on policies that could support completion of the sixth and first reviews of Rwanda’s PSI- and SCF-supported programs, respectively. The Executive Board is scheduled to consider the reviews in January 2017.
“Rwanda’s economic performance remains strong, with GDP growth of 6.5 percent in the first half of 2016. Growth projections for the year remain at 6 percent, driven by services activity, with somewhat lower growth in agriculture due to the recent drought, and a contraction in manufacturing/construction following the end of a recent investment boom. 12-month consumer price inflation has risen in recent months to about 6 percent, due mainly to higher food prices and, to a lesser extent, higher import prices following recent depreciation of the Rwandan franc,” the IMF report said.
“The main near-term objective of the current programs is to respond to adverse global developments, most notably commodity prices, which has led to growing external imbalances, resulting in pressure on the Rwandan franc and the banking system’s foreign exchange reserves,” the body explained.
It said, “To address external imbalances, short term adjustment policies have been put in place, comprised of: continued exchange rate adjustment, resulting in Rwandan franc depreciation of about 9 percent so far in 2016; modest containment of new public spending to protect priority spending while avoiding a spike in the fiscal deficit despite recent shortfalls of external financing; and a more prudent monetary policy stance, consistent with less expansive private sector credit growth. IMF staff agreed with the government’s assessment that longer term policies should help restore external sustainability. These include accelerating policies to support larger and more diverse exports and promoting domestic production of certain products currently imported, through the recent ‘Made in Rwanda’ campaign.”
The IMF noted that, “Performance under the program has been strong, with almost all program targets set through end-June 2016 being achieved. Nascent signs suggest that adjustment policies are proving successful at reducing the trade deficit for goods and services, further abetted by the recent completion of several large public investment projects.
“Although these developments are likely to contain growth at a still-robust 6 percent through 2017, by reducing external imbalances they should help maintain official foreign exchange reserves coverage at adequate levels.
“IMF staff welcomes the early and decisive actions already taken by the government, which will help to avoid a more serious situation. These policies should thereby help safeguard medium term growth prospects — around 7 percent –by avoiding potentially harsher adjustment policies that are more disruptive to growth. Depending upon weather and agriculture, inflation is expected to get back toward the government’s medium term 5 percent target.
“To further support program objectives, the government plans to implement measures aimed at deepening financial market activity and improving effectiveness of monetary policy are welcomed. Moreover, measures to strengthening domestic revenue collection and enhance budget execution reporting for the purposes of budgetary planning should be beneficial.”
Also, it was stated that the mission met with Minister of Finance and Economic Planning, Claver Gatete, Governor of the National Bank of Rwanda, John Rwangombwa, Minister of Trade, Industry and East African Community Affairs, François Kanimba, Minister of Gender and Family Promotion, Esperance Nyirasafari, Minister of Infrastructure, James Musoni, Members of the Parliament Budget Commission, and other senior government officials, private sector representatives, and development partners. The team thanks the various interlocutors for the collaborative and candid discussions.
By Adedapo Adesanya
Food Concepts Plc neutralized the gains recorded by three securities, returning the NASD Over-the-Counter (OTC) Securities Exchange into the negative territory with a 0.27 per cent loss on Thursday, December 4.
Yesterday, the share price of the parent company of Chicken Republic and PieXpress declined by 34 Kobo to sell at N3.15 per unit compared with the previous day’s N3.49 per unit.
This shrank the market capitalisation of the OTC bourse by N5.72 billion to N2.136 billion from N2.142 trillion and weakened the NASD Unlisted Security Index (NSI) by 9.57 points to 3,571.53 points from 3,581.10 points.
Business Post reports that Central Securities Clearing System (CSCS) Plc went down by 50 Kobo to N38.50 per share from N38.00 per share, FrieslandCampina Wamco Nigeria Plc gained 29 Kobo to sell at N55.79 per unit versus N55.50 per unit, and Geo-Fluids Plc added 5 Kobo to close at N4.60 per share compared with Wednesday’s closing price of N4.55 per share.
Trading data indicated that the volume of securities recorded at the session surged by 6,885.3 per cent to 4.3 million units from the 61,570 units posted a day earlier, the value of securities increased by 10,301.7 per cent to N947.2 million from N3.3 million, and the number of deals went up by 146.7 per cent to 37 deals from the 15 deals achieved in the previous trading session.
At the close of business, Infrastructure Credit Guarantee Company (InfraCredit) Plc was the most traded stock by value on a year-to-date basis with the sale of 5.8 billion units for N16.4 billion, trailed by Okitipupa Plc with 170.4 million units worth N8.0 billion, and Air Liquide Plc with 507.5 million units valued at N4.2 billion.
InfraCredit Plc also finished the session as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Dipo Olowookere
The upward trend witnessed at the Nigerian Exchange (NGX) Limited in recent sessions continued on Thursday as it further improved by 0.10 per cent.
This was despite investor sentiment turning bearish after the local equity market ended with 23 price gainers and 28 price gainers, indicating a negative market breadth index.
UAC Nigeria gained 10.00 per cent to finish at N88.00, Morison Industries appreciated by 9.94 per cent to N3.54, Ecobank rose by 8.53 per cent to N36.90, and Coronation Insurance grew by 8.47 per cent to N2.56.
On the flip side, Ellah Lakes depreciated by 10.00 per cent to N13.14, Eunisell Nigeria also shed 10.00 per cent to finish at N72.90, Transcorp Hotels slipped by 9.95 per cent to N157.50, Omatek shrank by 9.23 per cent to N1.18, and Guinea Insurance dipped by 8.46 per cent to N1.19.
Yesterday, the All-Share Index (ASI) went up by 152.28 points to 145,476.15 points from 145,323.87 points and the market capitalisation chalked up N97 billion to finish at N92.726 trillion compared with the previous day’s N92.629 trillion.
Customs Street was bubbling with activities on Thursday, though the trading volume and value slightly went down, according to data.
A total of 1.9 billion stocks worth N19.2 billion exchanged hands in 23,369 deals during the session versus the N2.3 billion valued at N21.0 billion traded in 21,513 deals a day earlier.
This showed that the number of deals increased by 8.63 per cent, the volume of transactions depleted by 17.39 per cent, and the value of trades decreased by 8.57 per cent.
For another trading day, eTranzact led the activity chart with 1.6 billion units sold for N6.4 billion, Fidelity Bank traded 31.0 million units worth N589.3 million, GTCO exchanged 28.3 million units valued at N2.5 billion, Zenith Bank transacted 27.1 million units for N1.6 billion, and Ecobank traded 21.9 million units worth N744.3 million.
By Adedapo Adesanya
The Naira marginally depreciated against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, December 4 amid renewed forex pressure associated with December.
At the official market yesterday, the Nigerian currency lost 0.01 per cent or 18 Kobo against the Dollar to close at N1,447.83/$1 compared with the previous day’s N1,447.65/$1.
It was not a different scenario with the local currency in the same market segment against the Pound Sterling as it further shed N15.43 to sell for N1,930.97/£1 versus Wednesday’s closing price of N1,925.08/£1 and declined against the Euro by 20 Kobo to finish at N1,688.74/€1 compared with the preceding session’s N1,688.54/€1.
Similarly, the Nigerian Naira lost N5 against the greenback in the black market to quote at N1,465/$1 compared with the previous day’s value of N1,460/$1 but closed flat against the Dollar at the GTBank FX counter at N1,453/$1.
Fluctuations in trading range is expected to continue during the festive season as traders expect the Nigerian currency to be stable, supported by intervention s by to the Central Bank of Nigeria (CBN)in the face of steady dollar demand.
Support is also expected in coming weeks as seasonal activities, particularly the stylised “Detty December” festivities, will see inflows that will give the Naira a boost after it depreciated mildly last month, according to a new report.
“As the festive Detty December season intensifies, inbound travel, tourism spending, and diaspora inflows are expected to provide moderate support for FX liquidity,” analysts at the research unit of FMDA said in its latest monthly report for November.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450 next week, buoyed by improved FX interventions by the apex bank.
Meanwhile, the crypto market was down as the US Federal Reserve’s preferred inflation gauge, core PCE, likely rose in September—moving in the wrong direction. However, volatility indices show no signs of major turbulence.
If the actual figure matches estimates, it would mark 55 straight months of inflation above the US central bank’s 2 per cent target. The sticky inflation would strengthen the hawkish policymakers, who are in favour of slower rate cuts.
Ripple (XRP) depreciated by 4.5 per cent to $2.08, Solana (SOL) went down by 3.8 per cent to $138.11, Litecoin (LTC) shrank by 3.1 per cent to $83.23, Dogecoin (DOGE) slid by 2.5 per cent to $0.1463, Cardano (ADA) declined by 2.1 per cent to $0.4368, Bitcoin (BTC) fell by 0.9 per cent to $91,975.45, Binance Coin (BNB) crumbled by 0.9 per cent to $899.41, and Ethereum (ETH) dropped by 0.7 per cent to $3,156.44, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
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