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
The NASD Over-the-Counter (OTC) Securities Exchange closed higher by 1.41 per cent on Friday, May 15, supported by four securities on the platform.
During the session, FrieslandCampina Wamco Plc added N14.24 to its share price to sell for N159.00 per unit, in contrast to the previous day’s N144.76 per unit.
Further, Central Securities and Clearing System (CSCS) Plc appreciated by N1.34 to N72.34 per share from N71.00 per share, Geo-Fluids Plc improved its price by 4 Kobo to N2.94 per unit from N2.90 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to trade at 61 Kobo per share compared with Thursday’s closing price of 60 Kobo per share.
As a result, the NASD Unlisted Security Index (NSI) rose by 58.20 points to 4,188.41 points from 4,130.21 points, and the market capitalisation soared by N34.82 billion to N2.506 trillion from N2.471 trillion on Thursday.
During the session, the volume of trades went up by 180.8 per cent to 1.2 million units from 417,349 units, and the value of transactions increased by 29.8 per cent to N29.8 million from N23.2 million, while the number of deals fell by 22.6 per cent to 24 deals from 31 deals.
Great Nigeria Insurance (GNI) Plc ended the day as the most traded stock by value on a year-to-date basis with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 60.8 million units exchanged for N4.1 billion, and Okitipupa Plc with 27.9 million units valued at N1.9 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units traded for N1.2 billion.
By Dipo Olowookere
The bears overpowered the Nigerian Exchange (NGX) Limited on Friday, sinking it further by 0.76 per cent when the closing gong was struck by 4 pm.
The nation’s flagship equity market was under selling pressure during the session, as investors booked profits after the shares witnessed price appreciation in the past trading sessions.
The energy sector was the most impacted, as it shed 4.43 per cent. The consumer goods index declined by 0.90 per cent, the banking counter decreased by 0.15 per cent, and the industrial goods sector lost 0.08 per cent, while the insurance counter gained 2.42 per cent, which was not enough to salvage the situation.
Consequently, the All-Share Index (ASI) contracted by 1,912.19 points to 250,330.92 points from 252,243.11 points, and the market capitalisation moderated by 1.225 trillion to N160.444 trillion from N161.669 trillion.
Zichis was the worst-performing stock for the session after it gave up 9.97 per cent to close at N29.43, FTN Cocoa slipped by 9.95 per cent to N8.96, The Initiates slumped by 9.90 per cent to N32.30, LivingTrust Mortgage Bank tumbled by 9.88 per cent to N3.83, and International Energy Insurance dropped 9.71 per cent to trade at N2.79.
The best-performing stock was ABC Transport, which grew by 10.00 per cent to N6.27. May and Baker also appreciated by 10.00 per cent to N47.30, SCOA Nigeria surged by 9.98 per cent to N33.05, Trans-Nationwide Express expanded by 9.97 per cent to N7.06, and DAAR Communications jumped 9.76 per cent to N2.25.
Yesterday, investors traded 1.1 billion shares worth N44.3 billion in 65,744 deals compared with the 1.0 billion shares valued at N41.6 billion transacted in 74,822 deals a day earlier. This indicated a dip in the number of deals by 12.13 per cent, and a rise in the trading volume and value by 10.00 per cent and 6.49 per cent, respectively.
Chams was the busiest equity for the day, with 328.5 million units sold for N1.1 billion. UBA traded 61.6 million units worth N2.7 billion, First Holdco transacted 58.7 million units valued at N4.2 billion, Secure Electronic Technology exchanged 51.9 million units worth N45.0 million, and Access Holdings traded 51.8 million units valued at N1.3 billion.
By Adedapo Adesanya
The last trading session of the week at the Nigerian Autonomous Foreign Exchange Market (NAFEX) ended on a negative note for the Naira on Friday, May 15, as it lost N15 Kobo or 0.1 per cent against the Dollar to trade at N1,371.04/$1 compared with the previous day’s N1,370.89/$1.
However, it further appreciated against the Pound Sterling in the same market segment yesterday by N20.77 to close at N1,830.61/£1 versus Thursday’s value of N1,851.38/£1, and gained N7.91 against the Euro to settle at N1,595.07/€1 versus N1,602.98/€1.
At the GTBank FX desk, the Naira lost N2 against the US Dollar during the session to sell at N1,383/$1 compared with the preceding session’s N1,381/$1, and at the black market, it remained unchanged at N1,385/$1.
The Naira is forecast to be broadly stable, supported by Dollar sales by the Central Bank of Nigeria (CBN) amid steady, higher oil receipts, with the market settling into a balance.
Policy direction is also expected to give the market some boost as the CBN said the new edition of the FX market guidelines will deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
According to the Governor of the CBN, Mr Yemi Cardoso, the update is due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework. According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Meanwhile, the cryptocurrency market plunged into the red zone as rising bond yields hit risk assets across markets, while traders are increasingly betting the Federal Reserve may need to raise rates again. Rising energy prices and resurging inflation could force central banks back into tightening mode.
Cardano (ADA) shrank by 4.4 per cent to $0.2557, Dogecoin (DOGE) slid by 3.7 per cent to $0.1104, Ripple (XRP) depreciated by 3.5 per cent to $1.41, Solana (SOL) crashed by 3.5 per cent to $87.81, and Binance Coin (BNB) slumped by 3.4 per cent to $659.64.
Further, Bitcoin (BTC) declined by 2.6 per cent to $78,547.49, Ethereum (ETH) lost 2.1 per cent to quote at $2,209.19, and TRON (TRX) tumbled by 0.7 per cent to $0.3509, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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