AZA Finance FX Week Ahead: Mobile money tax dispute weighs on Cedi

Governor of the Bank of Ghana, Dr. Ernest Addison, has said it is not yet time to scrap the electronic payment levy (E-levy) despite the disruption it has created in the financial inclusion agenda.

China cuts Africa funding as EU steps up
China this week reduced the amount of money pledged to Africa for the first time in a decade amid criticism of its lending practices on the continent and potential debt traps that could force borrowers to surrender ownership of key assets. China’s President Xi Jinping pledged $40bn—a third less than the $60bn China committed back in 2018.

At the same time, competing powers are stepping up their influence on the continent. Last month, the US signalled it wanted to revamp its relationship with African nations, while the European Union announced its overseas infrastructure investment framework—a direct rival to China’s Belt and Road Initiative that targets mobilising 300 billion euros ($340 billion) in public and private infrastructure investment.

Competition for investment in Africa between China, US and Europe should increase the amount of funds available and potentially lead to more attractive terms for African borrowers.

Michael Nderitu
Head of Trading, AZA

Weakened Naira may bounce back as dollar demand wanes
The Naira depreciated against the dollar this week, sliding to 565 on the unofficial window from 562 at last week’s close as demand for the greenback ticked up—at one point hitting 567.

Nigeria’s FX reserves also declined again according to the central bank’s latest data, falling by around $100m to $41.2bn.

Nigeria was added to a growing list of African nations banned from entry into Canada as countries tighten travel restrictions because of the Omicron Covid-19 strain that was first identified in Southern Africa.


We expect the Naira to appreciate in the coming days as dollar demand eases at the start of the month.

Murega Mungai
Trading Desk Manager, AZA

Mobile money tax dispute weighs on Cedi
The Cedi depreciated against the dollar this week, slipping to 6.140 from 6.127 at last week’s close. It follows Ghana’s MPs last Friday rejecting next year’s budget proposal amid disagreements over a new tax on mobile money transfers.

Meanwhile, President Nana Akufo-Addo has been seeking to drum up foreign investment, calling on Norwegians to invest in the West African country at last week’s Ghana-Norway business forum.

We expect pressure on the Cedi to ease in the coming week with the President taking steps to spur FDI.
Rand eases from 13-month low with Omicron assessment
The Rand recovered slightly this week after slumping to its lowest level against the dollar in more than a year on Friday as concerns about the Omicron Covid-19 strain that was first identified by scientists in South Africa roiled global markets.

The Rand hit a low of 16.28 at the end of last week after the discovery was first announced—its weakest level against the dollar in 13 months—before recovering to 15.94 this week as traders weigh information about the severity of the new strain and the potential for it to evade existing vaccines.

We expect the Rand to sustain current levels as uncertainty about the new strain lingers while President Cyril Ramaphosa considers introducing vaccine mandates and resists lockdowns for now.

Tourism rebound boosts Egyptian Pound outlook
The Pound was unchanged against the dollar this week, trading at 15.66/15.76.

The Egyptian Cabinet’s Information Decision Support Centre this week said the country had achieved its highest quarterly growth rate in two decades, with the economy expanding 9.8% in the first quarter of the 2021/22 fiscal year, up from 0.7% during the same period 12 months ago.

That recovery was fuelled in part by the performance of sectors such as tourism, which expanded by 15.2% as holidaymakers began returning to the country. We expect a stable Pound over the next seven days, supported by inflows from investors and exports.

Terry Karanja
Treasury Associate, AZA

Kenyan Shilling weakens to fresh dollar low
The Shilling continued to plumb new depths against the dollar this week, depreciating to 112.65/113.50.

Kenya’s central bank Governor Patrick Njoroge said the country’s economy is expected to rebound more strongly this year, forecasting growth of 6.4% before slowing slightly to 6% in 2022, driven by the recovery of sectors such as tourism that were hit hard by the pandemic.

We expect the Shilling to stabilise over the coming week with support from Kenya’s FX reserves, which currently stand at just shy of $8.8bn, sufficient for 5.36 months of import cover.

China’s $300bn Africa import plan to lift Ugandan exports
The Shilling was steady against the dollar this week, trading at 3560/3570 as dollar demand from importers was matched by supply.

On Sunday, China said it plans to increase purchases of agricultural goods from Uganda as part of a broader goal to boost imports from Africa to $300bn over the next three years. We expect the Shilling to remain stable over the coming week.

Tanzanian Shilling supported amid trade talks
The Shilling was unchanged against the dollar this week, trading flat at 2295/2305. Talks between the Tanzanian and Ugandan Presidents Samia Suluhu Hassan and Yoweri Museveni took place in Dar es Salaam in an effort to ramp up trade between the two nations by potentially removing all non-tariff barriers that have frustrated cross-border business to date.

We expect a stable Shilling in the coming week with support from bond investors inflows and agricultural exports.

Note to journalists: please feel free to quote from this briefing for news reports and let us know any requests for further comment or interviews via the contact details at the end, or by reply to this email. AZA is Africa’s largest non-bank currency broker by trading volume at over $1 billion annually. See 

Issued by AZA. This Newsletter is produced as a service to our clients. It is prepared by our dealing professionals and is based on their understanding and interpretation of market events. AZA cannot be held responsible for any losses of whatever nature sustained as a result of action taken based on comments contained in this publication.

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