John Campbell

Africa in Transition

Campbell tracks political and security developments across sub-Saharan Africa.

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Showing posts for "Finance"

Home Truths About the Size of Nigeria’s Economy

by John Campbell
Traders work at the Nigerian Stock Exchange in Lagos, February 13, 2015. The naira has crashed through the key level of 200 to the dollar this week in a rout sparked by weak oil prices and escalating tension over the postponement of a presidential election in Africa's biggest economy. (Reuters /Joe Penney) Traders work at the Nigerian Stock Exchange in Lagos, February 13, 2015. The naira has crashed through the key level of 200 to the dollar this week in a rout sparked by weak oil prices and escalating tension over the postponement of a presidential election in Africa's biggest economy. (Reuters /Joe Penney)

In 2014, following the first revision of Nigeria’s gross domestic product data in two decades, Abuja announced that its economy had overtaken South Africa’s as the largest in Africa. Using the rebased data, the International Monetary Fund (IMF) reported that that Nigeria’s economy grew at 12.7 percent between 2012 and 2013. Thereafter, there was some triumphalist rhetoric about the size and strength of the economy from personalities in then-president Goodluck Jonathan’s administration in the run up to the 2015 elections and among those promoting foreign investment in Nigeria. However, in 2016, reflecting the dramatic fall in petroleum prices and the value of the national currency, the naira, the IMF concluded that Nigeria’s GDP had fallen behind that of South Africa. The Economist noted that foreign investors are likely to be discouraged by the latest figures. Read more »

Nigeria Devalues its Currency

by John Campbell
A trader changes dollars with naira at a currency exchange store in Lagos, February 12, 2015. (Courtesy Reuters/Alessia Pierdomenico) A trader changes dollars with naira at a currency exchange store in Lagos, February 12, 2015. (Courtesy Reuters/Alessia Pierdomenico)

In the face of low international oil and gas prices, the domestic and international business community, academics, and journalists have all urged President Muhammadu Buhari to devalue the national currency, the naira. Buhari steadfastly refused. Based on his 1983-85 experience as head of state, also a period characterized by falling oil prices, he seems to believe that in an economy as dependent on imports as Nigeria, devaluing the naira would increase the cost of living for the poor, the majority of Nigeria’s citizens. Buhari famously observed that “Nigeria even imports toothpicks.” Read more »

Remarks on Morning in South Africa

by John Campbell
Wild flowers bloom on Cape Town's Table Mountain heralding the coming southern hemisphere spring, August 19, 2015. (Reuters/Mike Hutchings) Wild flowers bloom on Cape Town's Table Mountain heralding the coming southern hemisphere spring, August 19, 2015. (Reuters/Mike Hutchings)

The following text is the entirety of John Campbell’s speech delivered as part of the Department of State’s Ralph J Bunche Library Series, on June 8, 2016. 

From a certain perspective, South Africa is a mess. Many South Africans are disappointed by the way the country has seemingly squandered its promise as the ‘Rainbow Nation.’ Under the Jacob Zuma presidential administration, the country is treading water with respect to poverty and addressing the lasting consequences of apartheid. Corruption is rife. You can read all about it in the Mail and Guardian or the Daily Maverick. Read more »

South Africa’s Currency Falls Again on Rumors of Finance Minister’s Arrest

by John Campbell
South African Finance Minister Pravin Gordhan gestures during a media briefing in Sandton near Johannesburg, March 14, 2016. (Reuters/Siphiwe Sibeko) South African Finance Minister Pravin Gordhan gestures during a media briefing in Sandton near Johannesburg, March 14, 2016. (Reuters/Siphiwe Sibeko)

On May 15, the Sunday Times (English, Johannesburg) published rumors of the impending arrest of Finance Minister Pravin Gordhan over alleged revenue service irregularities. However, on May 16, Beeld (Afrikaans, Johannesburg) reported that President Zuma denied the Sunday Times report. Nevertheless, the South African national currency, the rand (ZAR), fell the following two days, reaching its weakest level in two months; it has fallen 2.1 percent against the U.S. dollar since March 15. Read more »

Nielsen: Ivory Coast Now Top Business Prospect in Africa

by John Campbell
A worker holds cocoa beans at SAF CACAO, a export firm in San-Pedro, Ivory Coast, January 29, 2016. (Reuters/Thierry Gouegnon) A worker holds cocoa beans at SAF CACAO, a export firm in San-Pedro, Ivory Coast, January 29, 2016. (Reuters/Thierry Gouegnon)

Nielsen’s “Africa’s Prospects: Macro Environment, Business, Consumer and Retail Outlook Indicators” of February 2016 rank orders sub-Saharan Africa’s nine leading markets. The list represents 71% of the region’s GDP, and half of its population. Ivory Coast is ranked first, Kenya second, Tanzania third, and Nigeria is fourth. It ranks Zambia as fifth, Cameroon as sixth, South Africa as seventh, Uganda as eighth, and Ghana brings up the rear. Read more »

South Africa and Barclays Africa

by Guest Blogger for John Campbell
A Barclays logo is pictured outside the Barclays towers in Johannesburg, December 16, 2015. (Reuters/Siphiwe Sibeko) A Barclays logo is pictured outside the Barclays towers in Johannesburg, December 16, 2015. (Reuters/Siphiwe Sibeko)

This is a guest post by Allen Grane, research associate for the Council on Foreign Relations Africa Studies program.

The recent rumor of Barclays PLC’s potential sale of its African businesses has caused a stir in South Africa. While Barclay’s has yet to confirm any decisions, there is plenty of reason to suspect the rumors are credible. Barclay’s has recently had to pay large regulatory fines for illegally rigging the London interbank rate, they have cut back substantially in Asia, and, perhaps worst of all, economic growth has significantly decreased in Africa. If Barclays PLC were to divest of holdings in Africa, it begs the question of who would buy their shares in Barclays Africa, specifically South Africa-based ABSA, one of the country’s largest banks. Read more »

Some Good News From South Africa

by John Campbell
Early morning smog shrouds suburbs of the coastal South African city of Cape Town as the sun rises June 8, 2006. (Reuters\Mike Hutchings) Early morning smog shrouds suburbs of the coastal South African city of Cape Town as the sun rises June 8, 2006. (Reuters\Mike Hutchings)

It is unduly gloomy in sunny South Africa. The national currency, the rand, is falling; the economy is hardly growing at all; the Zuma administration appears mired in corruption and mismanagement. There has been an upsurge in racist rhetoric. Hence the South African surprise and delight at the announcement that two of the richest South Africans, Allan and Gill Gray, are essentially giving away their wealth to their family foundation. Read more »

IMF Managing Director Lagarde’s Visit a Boost for President Buhari

by John Campbell
Nigeria's President Muhammadu Buhari and International Monetary Fund (IMF) Managing Director Christine Lagarde attend a meeting in Abuja, Nigeria, January 5, 2016. (Reuters/Afolabi Sotunde) Nigeria's President Muhammadu Buhari and International Monetary Fund (IMF) Managing Director Christine Lagarde attend a meeting in Abuja, Nigeria, January 5, 2016. (Reuters/Afolabi Sotunde)

President Muhammadu Buhari faces a serious economic crisis related to the plunge in the world price of oil, slow rates of economic growth, the prospect of rising American interest rates, a falling national currency, and declining government revenues. At the same time, he is working to restructure the economy away from undue dependence on oil by increasing infrastructure investment and vigorously pursuing an anti-corruption agenda demonstrated by the arrests of high-profile public figures. Read more »

Africa Taps Global Bond Markets at Rapid Rate

by Guest Blogger for John Campbell
Stockbrokers trade on the floor of the Zimbabwe Stock Exchange (ZSE) in Harare, February 24, 2015. (Courtesy/Philimon Bulawayo) Stockbrokers trade on the floor of the Zimbabwe Stock Exchange (ZSE) in Harare, February 24, 2015. (Courtesy/Philimon Bulawayo)

This is a guest post by Aubrey Hruby and Jake Bright. They are the authors of The Next Africa: An Emerging Continent Becomes a Global Powerhouse.

Sub-Saharan African governments are tapping global capital markets at a rapid pace, issuing $18.1bn in dollar denominated eurobonds from 2013-2015, nearly triple the $7.3bn issued in the previous three years. Read more »

Africa’s Middle Class

by John Campbell
Miners gesture next to houses, part of a 2.8 billion rand ($255 million) housing project put together by their employer at the WaterKlooff Hills in Rustenburg, September 16, 2014. (Courtesy/Siphiwe Sibeko) Miners gesture next to houses, part of a 2.8 billion rand ($255 million) housing project put together by their employer at the WaterKlooff Hills in Rustenburg, September 16, 2014. (Courtesy/Siphiwe Sibeko)

According to a recent Credit Suisse report, the African middle class is almost seventeen times smaller than had been previously thought. For at least a decade it has been conventional wisdom among investors that Africa’s middle class is growing, that the “lions are on the move” (McKinsey’s phrase), and that the continent is the next China for frontier market investors. In 2011, the African Development Bank’s (AFDB) paper, “The Middle Pyramid: Dynamics of the Middle Class in Africa,” had classified 313 million Africans as middle class, further supporting the optimistic narrative. Read more »