Global Macro Highlights

Eurozone inflation rate decreased to 2.5% in June

Preliminary data from Eurostat indicates that the Eurozone inflation rate decreased to 2.5% in June, down from 2.6% in May. This decline was primarily due to a reduction in food prices and energy, which fell to 2.5% and 0.2% in June respectively, from 2.6% and 0.3% in May. While the drop in inflation is a positive development, we expect the European Central Bank (ECB) to wait for further evidence of easing inflationary pressures before considering another rate cut.

Ghana has reached an agreement to restructure its USD13.00bn international bond

In Sub-Saharan Africa, the Kenya National Bureau of Statistics (KNBS) reported a GDP growth of 5.0% YoY in Q1:2024, down from 5.5% YoY in Q1:2023. Growth was driven by expansions in agriculture (+6.1%), real estate (+6.6%), and the financial and insurance sectors (+7.0%). This positive trend follows a decline in inflation to 4.6% in June 2024, after peaking in March 2023. We anticipate that Kenya’s monetary authorities will hold rates steady at their next meeting, following hikes in December and February.

Germany’s inflation rate declined to 2.2% in June from 2.4% in May

Germany’s inflation rate declined to 2.2% in June from 2.4% in May. Despite a 0.5% MoM increase in food inflation, core inflation reached its lowest point since February 2022. This overall drop in inflation was mainly due to substantial reductions in energy costs (-2.1% compared to -1.1% in May) and goods prices (0.8% compared to 1.0% in May), which countered the rise in food prices. Given that this persistent downward trend in inflation continues, additional monetary policy easing by the ECB, is expected overtime. 

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Domestic Updates

The National Bureau of statistics, capital importation into the country grew by 210.2%

According to the data from the National Bureau of statistics, capital importation into the country grew by 210.2% QoQ to USD3.4bn in Q1:2024 up from USD1.1bn in Q4:2023 and 198.1% YoY. This performance was largely influenced by foreign Portfolio Investment which contributed 61.5% to the total capital importation with an inflow of USD2.1bn, while other investment and foreign direct investments contributed 35.0% and 3.5%, respectively. Going forward, we still expect increase in foreign inflows hinged on high interest rate environment.

The Federal Government has introduced new regulations regarding compliance and withholding tax

The Federal Government has introduced new regulations regarding compliance and withholding tax (WHT) deductions at the source. Significant changes include the establishment of a unified WHT system for capital gains tax, personal and corporate income tax, and petroleum profits tax. Moreover, WHT has been eliminated for over-the-counter transactions involving small trade businesses, and manufacturers, as well as on imported goods, are now exempt from WHT. Additionally, reduced WHT rates have been implemented for SMEs and businesses with low-profit margins. These measures aim to address tax system loopholes while promoting a supportive environment for business growth and industry development.

Some of the Nigerian electricity distribution company have announced an increase in electricity tariffs for Band A users to ₦209/kWh

Some of the Nigerian electricity distribution company have announced an increase in electricity tariffs for Band A users to ₦209/kWh, up from ₦206/kWh, following a prior reduction from ₦225/kWh. Tariffs for Band B, C, and D users remain unchanged. This adjustment is a result of the revision of the 2024 Multi-Year Tariff Order (MYTO) for Band A feeders and is attributed to the high operational costs faced by the DisCos. This decision could further strain the operational costs and efficiency of many industries, which are already struggling with high borrowing cost and elevated inflation.

NUPRC has announced that Oando Plc has successfully acquired 100% of the shares of Nigerian Agip Oil

At the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has announced that Oando Plc has successfully acquired 100% of the shares of Nigerian Agip Oil Company Limited (NAOC Ltd). Although this acquisition was initially announced in September 2023, it faced delays due to pending regulatory approvals. This transaction, along with recent acquisitions involving three other major oil companies in Nigeria, highlights significant developments in the energy sector.

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