Photograph — Bloomberg

Here are three big stories from Africa’s business and policy landscape you (probably) didn’t miss but should keep in mind this week:

Nigeria’s increases benchmark interest rate to record high 26.25%

Last week, the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) raised the benchmark interest rate by 150 basis points, bringing it to a record high of 26.25%. This decision was announced by CBN Governor Yemi Cardoso following the 295th MPC meeting. This marks the third consecutive interest rate hike implemented by the CBN in 2024, to combat soaring inflation. According to the National Bureau of Statistics (NBS), inflation reached a concerning 33.69% in April 2024.

Cardoso attributed the third consecutive interest rate hike this year to the ongoing fight against inflation, which reached a concerning 33.69% in April 2024 according to the National Bureau of Statistics (NBS). While acknowledging a slight increase in year-on-year inflation, the MPC noted positive trends. They observed a significant decline in both month-on-month food inflation and core inflation, suggesting the effectiveness of the CBN’s hawkish monetary policy stance implemented since the beginning of 2024.

While acknowledging the rise in year-on-year inflation for April, Governor Cardoso emphasized positive signs. He pointed to a decline in month-on-month figures for both headline food inflation and core inflation, suggesting that the CBN’s hawkish monetary policy stance might be yielding some initial success. In addition to the interest rate hike, the CBN opted to maintain other key policy measures. The Cash Reserve Ratio (CRR) for Deposit Money Banks (DMBs) remains at 45%, while the asymmetric corridor surrounding the Monetary Policy Rate (MPR) is set at +100 and -300 basis points. The liquidity ratio for banks was also held steady at 30%. The CBN also directed all existing Bureau de Change (BDC) operators in the country to reapply for new licenses in their preferred category, starting from June 3, 2024.

Google’s Umoja, a fiber optic cable to connect Africa and Australia

Google has unveiled an ambitious project called Umoja, a fiber optic cable designed to directly connect Africa and Australia. This ambitious initiative promises to revolutionize digital connectivity across the continent. Umoja will begin in Kenya and find its way through several African nations, including Uganda, Rwanda, the Democratic Republic of Congo, Zambia, and Zimbabwe, before reaching its South African terminus. There, it will connect to the Google Cloud region before venturing under the Indian Ocean to reach Australia. The project’s terrestrial route was built in partnership with Liquid Technologies. This collaboration ensures that other countries beyond the initial path can tap into the network’s potential, fostering wider digital inclusion.

Umoja becomes part of Google’s Africa Connect initiative, which previously saw the launch of Equiano, a subsea cable connecting Africa and Europe. Kenyan President William Ruto lauded Google’s investment, highlighting its contribution to strengthening global and regional digital infrastructure. He emphasized the critical role Umoja plays in ensuring reliable connectivity, especially in light of recent internet disruptions caused by undersea cable damage. In March, several African countries faced internet outages due to such incidents. Similarly, failures in May involving the Eassy and Seacom cables disrupted internet services in East African countries.

Nigeria’s GDP Growth Slows in Q1 2024

According to the latest National Bureau of Statistics (NBS) report, Nigeria’s Gross Domestic Product (GDP) grew by 2.98% in the first quarter of 2024. While this is a slowdown compared to the 3.46% growth recorded in Q4 2023, it is still an improvement over the 2.31% growth seen in Q1 2023. The services sector was the primary driver of economic activity, expanding by 4.32% and contributing over half (58.04%) to the overall GDP. This sector’s importance has grown compared to the same period last year. The agriculture sector witnessed a slight increase of 0.18%, recovering from a decline in Q1 2023. The industry sector also saw growth, albeit moderate, at 2.19% compared to 0.31% in the previous year’s first quarter.

Despite the slowdown in real GDP growth, Nigeria’s economy exhibited positive signs in nominal terms. The total GDP for Q1 2024 reached N58,855,142.27 million, a significant increase of 14.86% compared to N51,242,151.21 million in Q1 2023. The oil sector saw a positive real growth of 5.70%, a significant improvement over the -4.21% recorded in Q1 2023. However, this is down from the 12.11% growth observed in Q4 2023. On a quarter-to-quarter basis, the oil sector did achieve a growth rate of 13.77% but contributed a smaller share (6.38%) to the overall GDP compared to the services sector. Meanwhile, the non-oil sector, grew by 2.80% in Q1 2024. This growth remained relatively steady compared to the same quarter in 2023 but slightly lower than in Q4 2023.

ICYMI: Market roundup

  • Nigeria’s equities market went downwards over a 5-day trading week, with the NGX All-Share Index depreciating by 0.52% to close at 97,612.51 points. The top gainers were Berger Paints Plc. (20.65%), Regency Assurance Plc. (19.35%), Cutix Plc (10.20%), Mcnichols Plc (10.00%), and Nestle Nigeria Plc (9.76%). The top decliners were Deap Capital Management and Trust plc (-24.23%), FTN Cocoa Processors plc (-16.67%), Transnational Corporation Plc (-12.13%), United Bank for Africa plc, (-12.13%), and UPDC Plc. (-11,43%).
  • The naira closed the week at ₦1482.33/$1 on Friday at the investor’s and Exporters’ window.
  • Brent crude closed the week at $82.19 while US West Texas Intermediate (WTI) crude closed at $77.72.
  • The global cryptocurrency market cap stood at $ 2.58 trillion, as of 6 am Monday, the 27th of May. Bitcoin stood at $68,431.17, a 1.94%, increase over the week, Ethereum increased by 24.57% to trade at $3,896.06 and Binance coin also decreased by 3.91% over the week, to trade at $601.65
  • Last week, OneOrder, a tech supply chain and logistics solution that aims to revolutionize the hotel, restaurant, and catering industries in Egypt, raised $16 million in equity and debt in a Series A round.
  • Orca, a South African startup that works with banks and fintechs in emerging markets to fight various types of fraud, raised a $550 K pre-seed round.

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