Standard Bank

Africa markets watch Africa ● September 2008

Botswana Recent developments

Zimbabwe – On Monday, 15 September 2008 we witnessed the historic signing of the power-sharing agreement
that lays the foundation for the formation of a transitional government of national unity in Zimbabwe. For a lot of
Ghana Zimbabweans this agreement holds the promise that they finally have a government that will start addressing their
plight. The international community is watching in anticipation of a strong and genuine commitment of the
signatories to rebuilding the country. This agreement is built on various aspects identified as significant for the
restoration and rebuilding of the country’s economy; for example, land reform, constitutional reform and freedom of
Kenya expression and communication. The implementation of these pillars of the agreement should convey a strong
message of commitment and cooperation among the country’s stakeholders. The success of this fragile agreement
depends not only on the benevolence of the signatories to the deal but on their ability to ascend the differences and
Lesotho animosity eminent in the negotiation stages. To the Zimbabweans, normality will be realised when the rights to pave
their own path are fully entrenched and protected through the ballot box. It is important to note that the agreement
signed does not outline policy prescription necessary for economic recovery nor does it present clear government
thinking necessary to restore some confidence in the country. The agreement does, however, provide a platform
Malawi
from which genuine and inclusive deliberations on policy direction and an economic recovery plan can now start.
Commitment and compromise from all signatories to the agreement might help to restore private sector confidence
that has become a negative force in the recent past.
Mauritius
Angola - Almost one month after voters elected parliamentary representatives for the first time in 16 years, Angola
has sworn in its new parliament. One-hundred-and-ninety-one legislators from the Movement for the Liberation of
Angola (MPLA) took seats in the legislature, while the largest opposition party, the National Union for the Total
Mozambique Liberation of Angola, has just 16 representatives. The remaining seats are shared among the smaller opposition
parties, with the Social Renewal Party claiming eight, the Angola National Freedom Front claiming three and the
New Democratic Coalition claiming two. The new House speaker is former Prime Minister Fernando Dias dos
Santos, who replaces Roberto de Almeida. A new cabinet is expected to be composed soon.
Namibia
Mauritius - The central statistics bureau of Mauritius has revised its 2008 real GDP forecast down from 5.7% to
5.6%. Mauritius is closely linked to international financial markets and the slowdown in the US and Europe will have
Nigeria significant connotations for the Mauritian economy and its reliance on through-trade and transportation. Despite a
deteriorating external environment and softer growth, there are still signs of strength in the economy. The sugar
sector continued to perform above expectations in the second quarter of this year and manufacturing also came in
on the upside compared to the first quarter of this year.
Swaziland
Nigeria - The Central Bank of Nigeria (CBN) held an emergency meeting of its Monetary Policy Committee on 18
September 2008 to assess the state of the domestic banking system in the context of the current global financial
crisis and to address the liquidity shortages eminent at that time. In an attempt to lubricate the system, the MPC
Tanzania
decided to reduce the Monetary Policy Rate (MPR) by 50 basis points from 10.25% to 9.75%; reduce the cash
reserve ratio from 4% to 2%; reduce liquidity requirements for banks from 40% to 30%; extend the repo tenors with
the CBN from overnight to 90 days, 180 days and 360 days; and to buy and sell securities (Treasury bills) through
Uganda two-way quotes. In the short term, these measures should easily inject about NGN1.5 trillion into the system.

Zambia - Four presidential candidates filed their nomination papers between 23 and 26 September 2008 for the
presidential by-elections scheduled for 30 October 2008. The main contenders are the ruling Movement for
Zambia Multiparty Democracy’s candidate, the current acting president, Rupiah Banda, the colourful Michael Sata of the
Patriotic Front and Hichelema Hakainde of the United Party for National Development (UPND). The prospects for
the UPND candidate, who performed surprisingly well in the 2006 general election, are expected to be diluted by the
fact that at the upcoming presidential by-election he will not be representing the three-party alliance, the United
Zimbabwe
Democratic Alliance, as he did in 2006. This time around, the UPND’s former alliance partners, the United National
Independence Party and the Forum for Democracy and Development, are backing the ruling MMD’s candidate, thus
boosting Banda’s prospects..

Jan Duvenage, Anita Last, Yvonne Mhango & Victor Munyama

 Standard
Standard Bank Bank Group Economics
Group Economics

Botswana
Inflation continues to climb. Botswana’s inflation rate has
tended to be high and averaged 8.6% from 2002 to 2007. This
year inflation has continued its upward trend, from a low of 6.3%
y/y recorded in April 2007 to 15.1% y/y in August. Overall
inflation continues to breach the central bank’s upper limit of the
medium-term target of 3-6%. Food and non-alcoholic beverages
have been the main drivers of the inflation rate, rising by over
18% y/y every month since January, rising to 18.8% y/y in
August. Transport inflation rose by 37.3% y/y in July but eased
to 35.5% y/y in August. Non-food inflation rose by a more
subdued 14.7% y/y in July and August. Inflation is largely
imported from South Africa. We expect inflation to average
12.5% this year.
Inflat ion r ate
The Bank of Botswana leaves policy rate unchanged.
The Bank of Botswana’s Monetary Policy Committee (MPC)
kept the bank rate, the policy rate, unchanged at 15.5% at
its meeting on 14 August. The MPC raised the bank rate by
50 bps to 15.5% in June. The committee argued that
interest rates are at a level that is sufficient to contain
second-round effects, driven by administrative prices, and
dampen inflationary expectations, while avoiding the
retardation of economic growth. The real policy rate was at
a low of 0.5% in July. Monetary policy is more influenced by
the BoB’s medium-term inflation forecast and less by credit
growth, as in the past. Rates are expected to remain at
these levels.

Inflation - % y/y Interest rates - %

18 18
17
15
16
12 15
14
9 13
6 12
11
3 10
0 2002 2003 2004 2005 2006 2007 2008
2002 2003 2004 2005 2006 2007 2008 Prime rate Bank rate 3m BoBC
Source: Bank of Botswana Source: Bank of Botswana

Rising inflation rate implies a weaker pula. Under Botswana’s
crawling band exchange rate system, introduced in 2005, the
pula trades in a narrow band of ±0.5% around central parity. The
band effectively rules out a large and unexpected adjustment in
the exchange rate, which occurred in 2005. Botswana’s relatively
high inflation rate implies that the pula should weaken
proportionately in line with expected inflation differentials with its
main trading partners. The crawling band arrangement and
monetary policy are used jointly to achieve a competitive and
stable real effective exchange rate, which promote exports and
diversification. The pula traded at an average of BWP6.82/USD
in September. We expect the pula to trade at an average of
about BWP6.46/USD this year and BWP6.71/USD in 2009.
Diamond production declining. IMF statistics show the
diamond sector contributes 30% of GDP, 75% of exports
and 45% of government revenue on average. Botswana’s
diamond production has reached a plateau and is expected
to decline over the coming decade. Botswana needs to
diversify its output and export base. Indeed, diversification
has been on the government’s agenda for some time, but
the process is proceeding slowly, despite some successes.
In 2007 diamond exports amounted to USD3 359.2 million
and USD3 412.9 million in 2006. Exports amounted to
USD793.8 million in Q2 08, compared to USD1 021.5 million
in Q1 08.

Exchange rates Diamond exports – US$ million per quarter

BWP/USD BWP/ZAR
8.0 1.0 1,200
7.0 0.9 1,000
6.0 0.8 800
5.0 0.7 600

4.0 0.6 400

3.0 0.5 200

2002 2003 2004 2005 2006 2007 2008 0
2002 2003 2004 2005 2006 2007 2008
BWP/USD (lh) BWP/ZAR
Source: Bloomberg Source: Bank of Botswana

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Standard Bank Group
Group Economics
Economics

Botswana - picture gallery

Real GDP growth - % Sectoral contribution to GDP - %
Agriculture Other Construction
10 2.1% 14.3% Manufacturin
4.6%
8.3 g
3.6%
8 6.3
5.7 6.0 5.0
4.9 5.4 4.3
6 4.7 Trade &
hotels
3.6
4 10.4%

0 Mining
Banking, Government
00 01 02 03 04 05 06 07 08f 09f 38.0% 16.5%
insurance
10.5%
Source: IMF Source: IMF
Foreign exchange reserves Trade balance – Pula million
US$ mn months
11,000 50 35,000
30,000
9,000 40 25,000
20,000
7,000 30
15,000
5,000 20 10,000
5,000
3,000 10 0
2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007p
Forex reserves Import cover Exports Imports Merchandise trade balance
Source: Bank of Botswana Source: Bank of Botswana

Government budget balance - % of GDP Diamond prices - US$ index, 1982 = 100

10 180
8
170
6
4 160

2 150
0 140
-2
130
-4
120
-6
2001 2002 2003 2004 2005 2006 2007 2008
02/03 03/04r 04/05r 05/06p 06/07b
Source: IMF Source: Bank of Botswana

Weights of consumer price index (CPI) constituents Botswana Stock Exchange indicators
Pula billion '000 month-end
40 12
31% 22%
30 9

19%
8% 20 6
11% 9%
10 3

0 0
Food Transport 2002 2003 2004 2005 2006 2007 2008
Alcohol & tobacco Housing
Clothing Other Market cap. (lh) Domestic index (rh)

Source: Bank of Botswana Source: Bloomberg, Bank of Botswana

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Standard Bank Bank Group Economics
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Ghana
Inflation declines for two consecutive months. The
harvest season, which started in August, has provided some
relief from food inflation and headline inflation declined to
18.1% y/y in August from 18.3% y/y in July and 18.4% y/y in
June. Food, which represents around 45% of the CPI basket
of goods, rose from 7.5% y/y in August 2007 to 17.7% in
June 2008. This was due to the restriction of local food
supply in the north of the country by drought in the first part
of 2007, followed by flooding in September coupled with the
upward trend in global food prices at a time of high transport
costs. Over the same period, non-food inflation rose from
10.9% y/y to 18.9% y/y driven by changes in utility prices
and transport costs. The moderation in international crude oil
prices and the improved domestic food supply on the back of
the ongoing harvest season should continue to support a
marginal declining trend.
Inflation - % y/y
26
Bank of Ghana keeps the policy rate at 17%. The
Monetary Policy Committee (MPC) hiked the policy rate
by 100 basis points to 17% in July in response to
accelerating inflation. The central bank policy rate (prime
rate) was raised from 13.5% to 14.25% in March and
again in May by 175 basis points to 16%. Following the
MPC’s rate decision in July, average commercial bank
lending rates were similarly revised upwards within a
range of 22% to 41%. (The commercial bank rates
continue to show high spreads between deposit and
lending rates and are also well above the Bank of
Ghana’s prime rate). Due to a declining inflation trend
we do not expect an interest rate hike but we do expect
monetary policy to remain tight in the presence of
inflationary pressures stemming from pre-election
spending and high utility prices.
Interest rates - %
35

22 30
25
18
20
14
15

10 10
5
6
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008 Prime 91-day t-bill Lending

Source: Bank of Ghana Source: Bank of Ghana

The cedi continues to depreciate. The cedi lost some
ground during 2007 and depreciated by 5%, 7% and 17.5%
against the US dollar, pound sterling and euro respectively.
Demand pressures were exerted mainly from the golden
jubilee anniversary celebration, preparations for hosting the
AU summit and the continued energy crisis. In addition to
this, lower cocoa production, as a result of extreme rainfall,
led to a 33.8% decline in earnings from exports of cocoa
beans and products. Despite strong international prices for
gold and cocoa, the national currency continued to
depreciate in 2008 - a trend that was fuelled by a large and
burgeoning current account deficit stemming from capital
goods and oil imports. The cedi largely stabilised in August
and September and traded between GHc1.1543/US$ and
GHc1.1640. We expect marginal depreciation to continue,
especially in a pre-election context.
Favourable cocoa harvest expected. Ghana’s Cocoa
Board (Cocobod) expects favourable output for the
2007/08 season as a result of improving weather
conditions. Purchases declared by private buyers
reached 566 340 tonnes in the first 25 weeks of the
2007/08 season, which represents an increase of 10.2%
over the same period in 2007. Consequently, Cocobod
increased its initial estimate of 600 000 tonnes at the
start of the season to 634 000 tonnes (8% increase).
Last year the country declared total production of 614
469 tonnes, down from a record 740 457 tonnes in 2006.
The average price of cocoa bean exports (US$1 942.2
per tonne) at the end of 2007, increased by 7.7% to
US$2 091.8 per tonne in the first quarter of this year.

Exchange rates Cocoa prices – US$/metric tonne

1.18 1.60 3500
1.14
3000
1.10 1.50
1.06 2500
1.40
1.02 2000
0.98 1.30 1500
0.94
0.90 1.20 1000
2007 2008 2004 2005 2006 2007 2008

USD (rhs) EUR (lhs)

Source: Bloomberg Source: IMF

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 Standard Bank
Standard Bank Group
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Economics

Ghana – picture gallery

Real GDP growth - % Sectoral contribution to GDP - %
7
6
5
4
3
2
1
Trade, hotel & restaurant Services
0 Agriculture Cocoa production & marketing
2000 2001 2002 2003 2004 2005 2006 2007 2008 Mining & quarrying Manufacturing
Construction Other
Source: Bank of Ghana Source: Bank of Ghana
Foreign exchange reserves - US$ million Trade account - US$ million
3000 10000
8000
2500 6000
2000 4000
2000
1500 0
-2000
1000 -4000
-6000
500
2001 2002 2003 2004 2005 2006 2007
0
2004 2005 2006 2007 2008 Imports Exports Trade Balance

Source: Bank of Ghana Source: Bank of Ghana

Government budget balance - % of GDP Gold Price - US$/oz

0
1000
-2 900
800
-4
700
-6
600
-8 500
400
-10 2004 2005 2006 2007 2008
2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: IMF Source: Reuters

Weights of consumer price index (CPI) constituents Ghana Stock Exchange index
12000
7%
10% 9% 6%
5% 10000

8000
52% 4%
4% 6000
3%

4000
Food & Bev. Clothing & Footwear
Utilities Furnishings
2000
Trans. & Comm. Enter.
Health Alcohol & Tobacco 2004 2005 2006 2007 2008
Misc.
Source: Bank of Ghana Source: Bloomberg

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Standard Bank Bank Group Economics
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Kenya
Strong food price increase drives up September’s inflation to
28.2% y/y. This year’s poor “long rains” season (on the heels of
insufficient rainfall in the end-2007 “short rains” season) has
exacerbated the deterioration in food security. Declining food
stocks put upward pressure on prices, 2% m/m in September, and
spurred an acceleration in food inflation to 37.2% y/y from 36.2%
y/y in August. The incline in non-food inflation was largely due to
a significant increase in housing costs in September, 2% m/m.
The fuel and power, and transport and communication sub-
indices reported softer price increases in September, 0.5% m/m
and 0.3% m/m respectively, from 3.6% m/m and 0.9% in August.
Given the persistent food inflationary pressures, overall inflation is
projected to only slip below 20% in the second quarter of 2009.
Short-term interest rates ease. Following the central
bank’s decision to hike the policy rate to 9% in June 2008,
there was a parallel increase in the 91-day Treasury bill
yield to 8.03% in July. The tightening of policy was effective
at moderating the liquidity situation, which has now
normalised. The central bank has insisted that the drivers of
inflation are exogenous and due to liquidity to justify its
decision not to tighten policy despite high inflation. Greater
appetite for short-term debt over that with a longer maturity
partly explains the slide in short-term rates. Investors are
uncertain about future prospects, given the global financial
turmoil and recent political crisis in Kenya, are reluctant to
put their money in long-dated debt instruments.

Inflation - % y/y Interest rates - %

35
30 15
25
13
20
15 11
10 9
5
7
0
2004 2005 2006 2007 2008 5

Overall 2005 2006 2007 2008

Underlying (excl. food) 91-day TB rate Average lending rate
Underlying (excl. food, energy & transport) Central Bank Rate Weighted average repo
Source: Sources: National Bureau of Statistics, Central Bank of Kenya Source: Central Bank of Kenya

The Kenyan shilling slides. The shilling depreciated by a
significant 5.7% against the US dollar in September, compared
to the exchange rate in August, to a monthly average exchange
rate of KES71.65/USD. While the US dollar’s sharp gain of 3.7%
against the euro contributed to the weakening of the exchange
rate, the decline in foreign exchange inflows stemming from
agricultural exports, capital inflows and tourism revenue added
to the shilling’s woes. International reserves dropped to 3.2
months of imports at the end of September, from four months in
January, partly explaining the depreciation of the Kenya
currency. The shilling is now weaker against the US dollar than it
was during the political turmoil in the first quarter of 2008.
Depreciation pressures are expected to persist over the short
term.
Liquidity pressures subside. As expected, broad money
(M3) growth decelerated in the third quarter of 2008 to
17.1% y/y in August, from this year’s peak of 28.5% y/y in
April that reflected the surge in the growth rate of net foreign
assets due to the capital inflows related to the Safaricom
IPO. The slowdown in M3 growth was partly due to the
payment of refunds related to investors that had
oversubscribed to the IPO. M3 growth is expected to
stabilise at current levels. The deceleration of reserve
money growth to 16.7% y/y in May from 24.5% y/y in
January, reflects the decline in currency in circulation,
particularly during the political crisis when economic activity
was interrupted. However, from mid-2008 it is expected to
have picked up as the economy recovers.

Exchange rates Money supply growth - % y/y

30
110 16
24
100 14
18
90 12
12
80 10
6
70 8

60 6 0
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
KES/USD KES/EUR KES/ZAR (rhs) Broad money (M3) Reserve money

Sources: Bloomberg, Standard Bank Group est. Source: Central Bank of Kenya

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Standard Bank Group
Group Economics
Economics

Kenya - picture gallery

Real GDP growth - % Sectoral contribution to GDP - %
8
Electricity & Community,
7 Real estate, water social & Agriculture,
renting & 3% personal forestry &
6 bus. serv. services fishing
6% 4% 30%
5 Government
14%
4
7 Manufacturin
3 5.8 6.4 g
5.3 Transport,
11%
2 4.2 storage &
commun. Wholesale &
1 2.3 12% retail trade
Hotels &
Financial restaurants 11%
0 Construction
3% services 2%
2004 2005 2006 2007 2008p 2009f 4%

Source: Kenya National Bureau of Statistics, Standard Bank est. Source: Central Bank of Kenya

Foreign exchange reserves – import cover Trade account - US$ million

US$ millions months
2500 0
3600 4.5
3000 2000 -300
4.0
2400 1500 -600
1800 3.5 1000 -900
1200
3.0 500 -1200
600
0 -1500
0 2.5
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Gross foreign reserves Import cover Exports Imports Trade deficit
Source: Central Bank of Kenya Source: Central Bank of Kenya

Government finance - % of GDP Tea, Mombasa, Kenya, Auction price – US cents per kilogram
1.0
350
0.5
0.0
-0.5 300
-1.0
-1.5 250
-2.0
-2.5 200
-3.0
-3.5
150
-4.0
2002/03 2003/04 2004/05 2005/06 2006/07 2007/08
Source: Central Bank of Kenya Source: IMF

Weights of consumer price index (CPI) constituents Nairobi Stock Exchange indicators
2% 2% 3%
Kshs billions
4% 6000 1400
6%
1200
5500
9% 1000
50%
5000 800
6% 12% 4500 600
6%
400
4000
200
Food and drink Housing
Recreation and education Household goods and services 3500 0
Clothing and footwear Transport and communication 2006 2007 2008
Fuel and power Medical goods and services Market Capitalisation (rhs)
Personal goods and services Alcohol and tobacco NSE 20 Share Index (1966=100)
Source: Central Bank of Kenya Source: Central Bank of Kenya

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Lesotho
Overall inflation driven by food and energy prices. Inflation is
largely imported from South Africa as almost 85% of Lesotho’s
goods and services are sourced from there. High international
and regional food prices and high crude oil prices have impacted
negatively on the inflation rate. Drought conditions also add to
food price pressures as the subsistence economy is adversly
affected. In August overall inflation reached 11.2% y/y, one of
the highest rates in years, from 10.5% y/y in the previous month.
Food inflation was 15.2% y/y in August and 14.9% y/y in July,
somewhat lower than the high of 18.7% y/y recorded in
February. The food group has a weight of nearly 40% in the CPI.
Transport prices also rose steeply; by 14% y/y in August and
12.4% y/y in July.
Interest rates are linked to South African trends. Lesotho
is a member of the Common Monetary Area (CMA) with
South Africa, Namibia and Swaziland. Membership implies
that the county has limited control over monetary policy,
which is imported from South Africa. The Central Bank of
Lesotho monetary policy targets net international reserves of
US$500 million to support the 1:1 currency peg with the
rand. The Lombard rate, the policy rate, is set at 400 basis
points above the 91-day Treasury bill rate. Interest rates in
South Africa have risen on the back of higher inflation, but
the prices could start easing in 2009, leaving room for the
central bank to start cutting rates, reducing the prime rate
from 15.5% to 13.5% in December next year.

Inflation - % y/y Interest rates - %

20 20.0
17.5
15
15.0
10 12.5
10.0
5
7.5

0 5.0

2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008

Consumer inflation Food inflation Prime Lombard rate 91-day TBs

Source: Bureau of Statistics
Source: Central Bank of Lesotho

The currency depreciates. The loti is pegged at par to the South
Africa rand under the CMA agreement. Economic conditions in
Lesotho have no effect on the exchange rate. Export
competitiveness is, however, linked to the value of the currency.
The weaker long-term trend against the US dollar is welcome
relief for exporters, but imported food and fuel will become dearer
as a result, driving overall inflation higher. The exchange rate
averaged LSL7.70/USD in August compared to LSL7.34/USD in
July. Standard Bank expects that the exchange rate will average
LSL7.78/USD in 2008; LSL7.97/USD in 2009 and LSL8.10/USD
in 2010. Turmoil in the banking and financial markets, falling
commodity prices and a slowing world economy will ensure that
the exchange rate remains volatile.
Basotho mineworkers in South Africa. Basotho mine-
workers employed on South African mines, particularly gold
mines, provide valuable income for Lesotho households.
Even though the number of miners employed has fallen
dramatically, the value of the remittances has continued to
rise. In 2000 the number of Basotho miners employed in
South Africa was 64 907, but fell to 51 595 in 2006. Over the
same period the value of the remittances rose from M1 400
million to M1 983 million, as the average annual wage rose
from M30 131 to M53 670. The higher gold prices should
help boost demand for mine labour.

Exchange rate - LSL/USD Mineworkers and remittances

12 Number M millions
66,000 2,100
11 64,000 2,000
10 62,000 1,900
9 60,000 1,800
58,000 1,700
8
56,000 1,600
7 54,000 1,500
6 52,000 1,400
50,000 1,300
5
2000 2001 2002 2003 2004 2005 2006
00 01 02 03 04 05 06 07 08 09
Number employed (lh) Miners' remittances (rh)
Source: Bloomberg Source: IMF, Central Bank of Lesotho

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Standard Bank Group
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Economics

Lesotho - picture gallery

Real GDP growth - % Sectoral contribution to GDP - %
8 Manufacturin
7.2 Electricity & Construction
g
7 water 13.3%
5.4 17.9% Public admin
5.4%
6 5.2 7.8%
4.9 Livestock
5 4.2 5.8%
4
2.8 2.7 2.9
3 2.3 Wholesale &
1.8
2 Crops retail
10.0% 8.6%
1
0 Financial
Other intermed
00 01 02 03 04 05 06 07 08f 09f 17.8% Education 5.9%
7.6%
Source: IMF Source: IMF

Foreign exchange reserves Trade balance – US$ million

USD m Months 1500
1,000 8.0
900 7.5 1000
800 7.0
700 6.5 500
600 6.0
0
500 5.5
400 5.0 -500
300 4.5
200 4.0 -1000
2003 2004 2005 2006 2007 01 02 03 04 05 06e

Gross reserves Import cover Exports Imports Trade balance

Source: Bloomberg Source: IMF

Government budget balance - % of GDP, including grants Manufacturing index – Index 2000=100

20 160
140
15
120
10
100
5
80
0
60
-5
40
-10 2002 2003 2004 2005 2006 2007 2008
02/03 03/04 04/05 05/06 06/07 07/08p Textile and clothing Total manufacturing
Source: IMF Source: Bureau of Statistics

Weights of consumer price index (CPI) constituents Capital account – US$ million

Other 400
Transport Alcoholic 13.3%
7.8% beverages & 200
tobacco
Clothing & 6.4% 0
footwear
15.6%
-200
-400
-600
Furnishings, -800
h/h equip, Food & non-
maint. alc. bev. 01 02 03 04 05 06e
17.0% 39.8% Trade balance
Current account (incl transfers)
Capital & financial account
Source: Central Bank of Lesotho Source: IMF

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Standard Bank Bank Group Economics
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Malawi
Inflation accelerated to 9.1% y/y in August. Inflation
followed global trends, accelerating from 8.7% y/y in July,
mainly due to fuel and maize price increases. In spite of high
oil prices, inflation recorded the lowest rates in decades in
2007 and averaged just below 8%. However, oil prices that
kept reaching new highs as well as a marginal seasonal
increase in food inflation towards the end of last year saw
overall inflation starting to increase moderately from a
historical low of 7.1% y/y in September 2007 to 8.2% y/y in
March 2008. Although inflation eased in April and May due
to the seasonal decline in food costs, the upward trend
continued in June. High oil prices and increased government
spending ahead of the 2009 election as well as money
supply growth pose further upside risks to overall inflation.
Monetary Policy Committee keeps the policy rate
flat. In view of the current inflationary pressures
stemming from high international oil prices as well as
accelerating money supply growth, the Monetary Policy
Committee maintained its monetary stance at its
meeting, and kept the bank rate at 15% and the liquidity
reserve requirement at 15.5%. Despite the government’s
intention to encourage private-sector-led development of
the economy, we expect monetary policy to remain tight
in order to contain inflation expectations. However,
should inflation drop to the estimated levels of below 7%
presented in the 2008/09 budget, we expect interest
rates will be brought down to around 12%, as projected
in the 2008/09 budget.

Inflation - % y/y Interest rates - %

20 45
16
35
12

8 25

4 15
0
2004 2005 2006 2007 2008 5
Overall Inflation Non-food inflation 2004 2005 2006 2007 2008
Food inflation Prime-avg Bank rate 91-day t-bill
Source: National Statistics Office Source: Reserve Bank of Malawi

Kwacha stability ensured through RBM intervention. The
authorities attach importance to exchange rate stability as an
intermediate measure in maintaining macroeconomic
stability. The kwacha remained relatively stable against the
US dollar in the first three quarters of 2008 and averaged
MWK140.35/USD, MWK140.63/US$ and MWK140.69
respectively. In September the kwacha was slightly weaker
at MWK140.82. The economy is into the seasonal lean
period following the end of the tobacco auctions. The
pressure on foreign reserves from fertilisers and oil imports
will remain a concern for some time, although the kwacha is
expected to receive some support from donor funds and the
authorities. The RBM is expected to continue intervening in
the foreign exchange market and we therefore expect the
kwacha to trade within a narrow band of MWK140/US$ and
MWK142/US$.
Tobacco auction floors more than doubled sales.
The tobacco auction floors had processed about 143
million kilograms valued at US$348 million as at the end
of July 2008. In value terms, the quantity is almost
double that posted for the whole season last year
(US$185 million). As at 22 August, 168.7 kilograms of
the green gold had been sold, earning US$412.3 million
– an average price of 244 US cents per kilogram. Out of
the total sold, burley contributed 145.9 million kilograms
(86.5%) whereas flue-cured contributed 20.9 million
kilograms (12.3%). All foreign currency payments for
tobacco sold in Malawi are now made through the
central bank and not commercial banks as in the past.
The onset of uranium exports next year will be an
additional source of support for the local currency.

Exchange rates Tobacco export price – UScts/kg

260 24 350

220 22
300
180 20
250
140 18

100 16 200

60 14
150
2004 2005 2006 2007 2008
2004 2005 2006 2007
USD EUR ZAR (rhs)
Source: Bloomberg Source: Tobacco Control Commission

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Malawi – picture gallery

Real GDP Growth - % Sectoral contribution to GDP - %
10
8
6
4
2
0
-2
Agriculture Mining and quarrying
-4 Manufacturing Utilities
-6 Construction Distribution
Transport and Comm Finance & Insurance
2001 2002 2003 2004 2005 2006 2007 2008 2009
Private social services Government services

Source: IMF Source: OECD 2007

Foreign exchange reserves – import cover Trade Balance - US$ million

US$ million Months 1500
250 3.5
1000
200 3.0 500

150 2.5 0
-500
100 2.0
-1000
50 1.5 2001 2002 2003 2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Foreign reserves Import cover Imports Exports Trade Balance

Source: Reserve Bank of Malawi Source: Central Statistics Office

Government finance - % Tobacco exports – million Kg

0 140
-2
120
-4
-6 100
-8 80
-10
-12
60
-14 40
-16 20
02/03 03/04 04/05 05/06 06/07 07/08e 08/09f 0
Including grants Excluding grants 2001 2002 2003 2004 2005 2006 2007

Source: IMF Source: Reserve Bank of Malawi

Weights of consumer price index (CPI) constituents Malawi Stock Exchange index
5% 4% 6000
6%
6%
5000
9%
4000
58%
12%
3000

2000

1000
Food Housing
Clothing & footwear Misc. 0
Beverage & tobacco Transport 2006 2007 2008
Household operation
Source: Central Statistics Office Source: MSE

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Mauritius
Continued pressure on inflation from high food and oil
prices. Headline inflation has been on a declining trend
since July last year but remained relatively high at around
9%, largely as a result of the pass-through effects of high
food and energy prices. The appreciation of the rupee in the
first four months of this year dampened the impact of
mounting import prices, and inflation came marginally down
to 8.8% y/y in May. After remaining level during June,
inflation accelerated to 9.1% y/y in July and to 9.5% y/y in
August. Once again the main pressure came from food and
fuel. With oil prices showing a softening bias and food prices
expected to plateau, external pressures are easing, although
domestic pressures such as strong demand are expected to
remain. Our expectation is that overall inflation will slightly
exceed the 8.6% average projected in the 2008/09 budget.
Further interest rate cuts ruled out. Against the
backdrop of a reduction in policy interest rates by the US
Federal Reserve and the Bank of England as well as
potential downside risk to economic growth stemming
from decelerating growth in major trading partners, the
BoM cut the repo rate by 25 basis point to 9% in
February, lowered it further to 8.5% in March and in May
again by 50 basis points to 8%. In view of growing
demand-side pressures on inflation and no slowdown in
food and fuel prices, the BoM increased the repo rate on
21 July to 8.25%. It is likely that the MPC will commit to
another interest rate rise, especially if inflation presses
closer to double digits. However, there are some positive
signs, particularly with regard to commodity prices such
as food and oil which are thought to have peaked.

Inflation - % y/y Interest rates - %

14 14

12 12
10
10
8
8
6
6 4
4 2
2004 2005 2006 2007 2008
2
2004 2005 2006 2007 2008 Prime rate Bank rate
Lombard Rate Repo Rate
Source: Central Statistics Office Source: Bank of Mauritius

Rupee depreciated further in September to
MUR28.67/USD. Supported by FDI inflows, record tourism
earnings and the depreciation of the US dollar on currency
markets, the rupee appreciated by 9% in the first quarter of
this year to a four-year high of MUR25.5/US$. In April this
trend was reversed when the rupee averaged MUR26/US$,
MUR26.5/US$ in May and MUR27.2/US$ in June. This was
mainly on account of continued deterioration of the current
account as import prices, particularly food and fuel, pushed
up the import balance. The extent and duration of the global
downturn will play a large part in export demand as Mauritius
is closely linked to international financial markets and the
majority of its export demand (more than 50%) comes from
Europe and the US. The current account will therefore
remain under pressure. FDI and tourism receipts should lend
some support to the rupee.
Tourist arrivals increased by 5.5% in the first half of
2008. Tourist arrivals increased to 455 758 compared to
432 113 for the same period in 2007. Gross tourism
receipts for the first six months amounted to Rs22 170
million, an increase of 12.2% compared to Rs19 752
million for the same period in 2007. According to the
BoM, tourism receipts for this year will be around 13%
higher than last year. Tourist arrivals for the year are
estimated to be between 965 000 and 975 000 against
903971 last year. Given the construction timeframe of
current hotel projects, the sector should receive a
substantial increase in capacity through 2008 and 2009.
The sector continues to play a large role in terms of
attracting FDI and is one of the main drivers of the
country’s economic recovery.

Exchange rates Tourism receipts - Rs million

45 5.5 60000

40 5.0 50000

35 4.5 40000

30 4.0 30000
25 3.5 20000
20 3.0 10000
2004 2005 2006 2007 2008
MUR/USD MUR/Euro MUR/ZAR (rhs)
0
2001 2002 2003 2004 2005 2006 2007 2008

Source: Bloomberg Source: Central Statistics Office

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Mauritius – picture gallery

Real GDP Growth - % Sectoral contribution to GDP - %
12

10

2 Sugar Non-sugar agriculture

Export-oriented industry
0 Wholesale & Retail trade
Transport, storage & communication
2000 2001 2002 2003 2004 2005 2006 2007 2008
Others (incl. gov)
Construction
Hotels & Restau-rants
Financial Inter-mediation

Source: Central Statistics Office Source: IMF (2006)

Foreign exchange reserves – import cover Trade Balance – US$ million

2500 50 3000
2000 40 2500
2000
1500 30 1500
1000 20 1000
500
500 10 0
0 0 -500
-1000
2004 2005 2006 2007 2008
2000 2001 2002 2003 2004 2005 2006 2007
Foreign Reserves Weeks of import cover Imports Exports Trade balance

Source: Central Statistical Office Source: Central Statistical Office

Government finance - % of GDP Tourist arrivals - number

0 1200
-1 1000
-2
800
-3
600
-4
-5 400

-6 200
-7 0
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: IMF Source: Central Statistics Office

Weights of consumer price index (CPI) constituents Stock Exchange of Mauritius index
8% 9% 10% 2200
4%
16% 2000
9%
1800
13%
22% 4% 1600
5%
1400
1200
Clothing, footwear Housing, water, electricity 1000
Health Transport 800
Communication Furnishings, household 600
Recreation, culture Education 2005 2006 2007 2008
Restaurants, hotels Miscellaneous goods, services
Source: Central Statistical Office Source: Bloomberg

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Mozambique
Marginal increase in overall inflation to 10.7% y/y in
September. As projected, non-food inflation accelerated to 4%
y/y in September as the low base effect kicked in. Other than
food, the annualised inflation rates for the transport and
households’ goods sub-indices accelerated in September.
Although food prices moderated by 0.1% m/m in September, its
annualised inflation rate increased to 16.1% y/y, from 15.7% y/y
in August. The modest decrease in the food price in September is
in our view temporal, especially as the lean season is
approaching implying that food stocks will decline, putting upward
pressure on prices. However, a high base effect in the last quarter
of 2008 is expected to moderate the impact of higher food prices.
Single-digit inflation is thus projected to return in the first quarter
of 2009, when the worst of the lean period, and the festive
season has passed.
Inflation - % y/y
25
20
15
10
5
0
2004 2005 2006 2007 2008
Overall Food Non-food
Source: Source: Instituto de Nacional Estatistica
The metical holds steady against hard currencies. The
modest 0.7% depreciation of the Mozambican currency against
the US dollar in September, to MZN24.05/USD, was largely due
to a stronger US dollar. Conversely, the metical strengthened
against the rand, the currency of Mozambique’s largest trading
partner, South Africa, and the euro. The sound build up of
international reserves to beyond six months of import cover has
provided resources for the Bank of Mozambique to lean towards
foreign exchange sales to drain liquidity and place less emphasis
on Treasury bill issuances. The subsequent injection of foreign
exchange into the domestic market partly explains the strength of
the metical in recent months. Added to that are the large donor
and foreign direct investment inflows. The metical is projected to
hold steady at present levels over the short term.
The interest rate on the 91-day Treasury bill edged up in
the third quarter. The climb of the interest rate on the
short-term government security to 13.89% in August, after
being flat at 13.5% in the first half of 2008, reflects the
tightening of monetary policy in response to the spurt in
demand for money in the third quarter of 2007. The base
money stock exceeded the September programme target
ceiling in July, on account of strong demand for currency
from buyers acquiring newly harvested cash crops.
However, the spurt in base money was temporal and in
August had fallen to below the end-quarter target. The
approaching festive season is likely to prompt monetary
expansion, as such monetary policy is expected to remain
firm in the short term and thus the policy rate is expected
stabilise over this period.
Interest rates - %
30
25
20
15
10
5
2004 2005 2006 2007 2008
Prime Standing lending facility 91 day t-bill
Source: Banco de Mocambique
Base money fell below target ceiling in August, after
overshooting in July. Strong demand for currency in July
explains base money’s breach of the end of September
ceiling target of MZN17 347 million. It expanded by 15.6%
y/y in July and amounted to MZN17 479 million. This growth
spurt was due to the purchase newly harvested cash crops,
including cotton. In August, base money declined by 0.8%
m/m to MZN17 332 million, thus allowing for the monetary
aggregate to fall below the target ceiling. The long weekend
in early September may have spurred higher currency
demand that may have countered the moderation of base
money in August, implying a fair likelihood of a September
breach. The approaching festive season implies a fair
likelihood of monetary expansion in the short term.

Exchange rates Money supply

40 4.6 35
30
36 4.3
25
32 4.0
20
28 3.7
15
24 3.4
10
20 3.1
5
16 2.8
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
MZN/USD MZN/EUR MZN/ZAR (rhs) M2 Base money

Source: Bloomberg Source: Banco de Mocambique

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Mozambique – picture gallery

Real GDP growth - % Sectoral contribution to GDP - %
Education,
10 Real estate Agriculture,
4%
activities & animal
business production, Fishing,
8 hunting &
services, 9% Community 2%
services, 7% forestry, 24%
6 Financial
activities, 6% Extractive
8.4 8.7 industries,
4 7.5 7.7 1%
7.0 7.0
Transports,
2 storage & Manufacturin
communicati g, 15%
ons, 10% Commerce,
0 11% Electricity
Hotels and Construction, and water,
2004 2005 2006 2007 2008p 2009f restaurants, 4% 6%
2%
Source: Banco de Mocambique Source: Source: Instituto de Nacional Estatistica
Gross foreign reserves & import cover Trade balance – US$ million
2000 10 900
750
1600
8 600
1200 450
6 300
800
150
4 0
400
-150
0 2
-300
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Foreign reserves Import cover
Exports Imports Deficit
Source: Banco de Mocambique, Standard Bank est. Source: Banco de Mocambique
Government deficit - % of GDP Aluminium price – US$ per metric tonne
0
3500
-1
-2 3100

-3 2700
-4
2300
-5
-6 1900

-7 1500
2003 2004 2005 2006 2007 2008p 2004 2005 2006 2007 2008
Source: IMF CR. No 08/220
Source: IMF

Weights of consumer price index (CPI) constituents Capital account – US$ million

13% 5% 1500
10% 1000
5% 500
52%
0
1% 3% -500
3%
2% -1000
2% 2% 2% -1500
Food & non-alcoholic drinks Dwellings,water,elec., gas & fuels -2000
Transport Mobile dwellings, hhold equip. & main.
-2500
Clothes & footwear Health
Leisure, recreation & culture Communications 2006 2007 2008p 2009p 2010p
Alcohol & tobacco Restaurants & hotels
Miscellaneous Education
Foreign borrowing Amortisation Direct investment

Source: Instituto de Nacional Estatistica Source: IMF

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Namibia
Inflation may have peaked. As 85% of Namibia’s goods and
services are sourced from South Africa, inflation is largely
imported. This year inflation rose from 7.8% y/y in January to
12% y/y in August. Inflation is mainly driven by the escalation in
food and energy prices. The food group has the largest weight in
the overall consumer price index at 29.6%. Food inflation rose
from 15% y/y in January to 18.8% y/y in July, but eased to 18.3%
y/y in August. Food prices may have peaked which suggests
overall inflation could ease. However, transport inflation (weight
14.8%) remained high at 18.1% y/y in July and August. South
Africa’s producer price inflation is an important leading indicator
of Namibia’s inflation rate and rose by 19.1% y/y in August.
Although high it is expected to ease in coming months.
Monetary Policy Committee keeps policy rate flat.
Namibia’s policy stance is closely linked to that of the South
African Reserve Bank’s (SARB) through membership of the
Common Monetary Area (CMA). Namibia’s monetary policy
focuses on maintaining the Namibian dollar’s peg to the
South African rand at par by holding adequate foreign
exchange reserves. Namibia’s interest rates have remained
unchanged this year, whereas the SARB hiked rates in April
and June. Namibia’s policy or bank rate is 10.5% and the
prime rate is 15.25%. The Central Bank of Namibia (BoN) no
longer meets on the same day as the SARB. Interest rates
have started to diverge from South Africa’s, signalling some
degree of policy independence.

Inflation - % y/y Interest rates - %

20 20

16 16
12
12
8
4 8
0
4
-4
2002 2003 2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
CPI Food Prime rate Bank rate 91-day TB

Source: Bank of Namibia Source: Bank of Namibia

The Namibian dollar is under pressure to depreciate. The
Namibian dollar (NAD) is pegged to the South African rand
(ZAR) at 1:1. Several factors are affecting the exchange rate,
such as South Africa’s large trade and current account deficits,
emerging markets jitters and global uncertainty from the sub-
prime debacle, and are exposing the rand to further weakness.
The weaker exchange rate could help boost the export sector,
but equally could underpin imported inflation. Greater exchange
rate uncertainty and volatility can be expected. The projected
exchange rates for the rand/Namibian dollar exchange rate to the
US dollar are: NAD8.05/USD in Q4 2008; NAD8.17/USD in Q1
2009 and NAD8.12 in Q2 2009. The 12-month trading range is
NAD7.30 to NAD8.50 to the US dollar.
Diamond mining’s contribution to GDP declining. The
important diamond mining contributed 5.9% of GDP in 2007,
below the high of over 10.4% in 2002. The sector
contributed an average of 8.3% to GDP from 2000 to 2007.
Diamond mining output amounted to N$3.11 billion in 2007,
marginally below N$4.05 billion in 2006. The sector’s growth
is erratic: between 2002 and 2007 it grew by 17.3%, -3.5%,
38.6%, -3.4%, 25.2% and -0.3% respectively in real terms.
The mining and quarrying sector as a whole also exhibited
volatility. Diamond prices, as measured by the Antwerp
Diamond Index, surged to 171.7 in June this year (the latest
available) from 140.9 a year earlier, after being relatively
stable in 2006 (see Botswana Picture Gallery).

Exchange rate - NAD/USD Diamond mining

12 N$ billion %
5.0 12%
11
4.0 10%
10
9 3.0 8%

8 2.0 6%
7 1.0 4%
6
0.0 2%
5
00 01 02 03 04 05 06 07
00 01 02 03 04 05 06 07 08
Diamond mining (lh) % of GDP (rh)
Source: Bloomberg Source: Bank of Namibia

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Namibia – picture gallery

Real GDP growth Sectoral contribution to GDP - %
Mining & Other Manufacturin
quarrying 15.1% g
8 8.3%
6.7 6.6 12.6%

6 4.8 4.4 4.7

3.5 4.5
4.1 Fishing
4 3.5 4.2%
2.4
Agriculture & Other
2 services
forestry
5.7% 35.5%
Government
0
services
00 01 02 03 04 05 06 07 08f 09f 18.6%

Source: IMF Source: Bank of Namibia

Foreign exchange reserves Trade balance - N$ billion

US$ mn Months
1,400 7 25
1,200 6 20
1,000 5 15
800 4 10
600 3
5
400 2
0
200 1
-5
0 0
2002 2003 2004 2005 2006p 2007p
2004 2005 2006 2007 2008
Reserves (lh) Import cover (rh) Exports Imports Trade balance

Source: Bloomberg, Bank of Namibia Source: Bank of Namibia

Government budget balance (incl. grants) - % of GDP Fishing industry

N$ billion %
4 2.5 5.5%
2 2.0 5.0%
0 1.5 4.5%
-2 1.0 4.0%
-4 0.5 3.5%
-6
0.0 3.0%
-8 00 01 02 03 04 05 06 07
03/04 04/05 05/06e 06/07 07/08p
Fishing on board (lh) % of GDP (rh)
Source: IMF
Source: Bank of Namibia

Weights of consumer price index (CPI) constituents Namibia Stock Exchange index

20% 1,100
30%
1,000
7% 900
7% 800
21%
700
15%
600
500
400
Food & non-alc. bev. Housing, water, electricity 300
Transport Education 200
Misc. goods & services Other 2002 2003 2004 2005 2006 2007 2008

Source: Bank of Namibia Source: Bloomberg

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Nigeria
Risk to inflation remains high. Headline inflation declined from
14% y/y in July to 12.4% y/y in August 2008 driven by a decline
in food prices. Food prices (which account for about 64% of the
CPI basket) declined from an average of 20.9% y/y to an
average of 18.8% over the same period. Despite headline
inflation remaining in double digits, core inflation (headline
inflation, excluding food) declined from an average of 4.8% y/y in
July to an average of 3.9% y/y in August 2008. We expect the
improvement in agricultural production to ease food supply
problems thereby reducing food prices through 2008. Significant
growth in broad money, M2, mostly fuelled by rising private
sector credit growth continues to pose an upward risk to
inflation. We have revised our inflation forecast upwards to
average 10.7% in 2008.
Monetary policy rate (MPR) reduced by 50 basis points.
As core inflation remains in single digits, the central bank
continues to divert its focus to liquidity management to avert
the long-term inflationary pressures from fiscal expansion
and high inflows of oil revenue rather than fight the short-
term inflationary impact of rising food prices. Following an
emergency monetary policy committee meeting on 18
September, the MPR was reduced from 10.25% to 9.75% in
an attempt to address liquidity shortages in the system.
However, excess liquidity from fiscal expansion and rapid
private sector credit extension, which is driving high money
supply growth, continues to pose major interest rate risks.
Overall, we expect monetary policy to remain restrictive
through 2008.

Inflation - % y/y Interest rates - %

40 20

30 16
20
12
9.75
10
8
0
-10 4

-20 0
2005 2006 2007 2008 2005 2006 2007 2008
CPI inflation CPI ex food
CPI ex food & energy Transport Policy rate Prime 91-day TB
Source: National Bureau of Statistics Source: Central Bank of Nigeria

Naira exchange rate remains relatively strong. The central
bank continues to uphold its strong stance of a strong and stable
exchange rate. The exchange rate continues to trade within a
narrow range fluctuating around NGN117 per US dollar. A strong
naira should also help curb the high import bill, especially from
food and energy. Due to high oil revenues and fiscal expansion,
we expect the monetary authority to remain active in the forex
market. This should help reduce the surge in money supply and
be an effective way of managing excess liquidity that is posing
significant long-term risks to inflation. We expect the naira to
remain relatively strong and to average NGN116.50 per US dollar
in the fourth quarter of 2008.
Non-oil sector continue to drive economic growth. First
quarter GDP growth was revised downwards from 6.5% to
5.5%. The economy grew by 6.7% in the second quarter of
2008 mainly driven by 8.5% growth in the non-oil sector.
Non-oil sector growth was driven by strong agriculture
performance following favourable weather conditions and
high prices of agriculture products that increased by between
16% and 40% for the nine monitored agriculture
commodities. The unrest in the Niger Delta area continues to
constrain oil production thereby leading to slowdown in the
oil sector growth. The manufacturing sector contracted by
2.2% in the second quarter due to poor electricity supply.
Overall, we expect GDP growth to remain strong in 2008 due
to strong performance in the non-oil sector.

Exchange rates Real sectoral GDP growth - %

135 25
20
130 15
10
125 5
0
120
-5
115 -10
2006 2007 2008 2003 2004 2005 2006 2007 2008f 2009f
Naira/US$ Budget exchange rate (Naira/US$) Real GDP Oil GDP Non-oil GDP

Source: Bloomberg & Federal Ministry of Finance Source: National Bureau of Statistics

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Economics

Nigeria – picture gallery

Real GDP growth - % Sectoral contribution to GDP - %

12 Manufacturin
10.3 10.6 Wholesale & g, 4.0 Telecommun
10 9.4 retail trade, ication, 2.3 Agriculture,
8.6
16.2 42.2
8
6.2 6.4
6 5.4

2 Finance &
insurance, Building &
0 3.9 Oil & gas,
construction,
2003 2004 2005 2006 2007 2008f 2009f 1.7 19.4

Source: NBS Source: NBS

Foreign exchange reserves – US$ million Trade account

70000 100
80
60000
60
50000 40
40000 20
30000 0
-20
20000 -40
10000 -60
0 2004 2005 2006 2007 2008f
2003 2004 2005 2006 2007 2008
Exports Imports Trade surplus
Source: Bloomberg Source: IIMF

Government surplus - % of GDP Oil production and prices

30 million bpd US$/barrel
3.5 160
20 3.0 140
2.5 120
10 2.0 100
1.5 80
0 1.0 60
0.5 40
-10 - 20
2003 2004 2005 2006 2007 2008f 2005 2006 2007 2008
Overall balance (cash basis) Revenue Expenditure Total production
Bonny Light spot price (RHS)
Source: IMF Source: International Energy Agency

Weights of consumer price index (CPI) constituents Nigerian stock exchange – All share index
70000
18%
4%
60000
4%

64% 50000
3%
2%
40000
5%
30000

Food & non-alcoholic bev. Hse water, elec, gas & other fuel 20000
Transport Furn & hshld equip maint
Clothing & footwear Alcohol, tobacco & kola
10000
Other 2003 2004 2005 2006 2007 2008

Source: NBS Source: Bloomberg

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Swaziland
High food and transport prices driving inflation. Inflation is
largely imported from South Africa through close trade links.
Almost 90% of Swaziland’s imports are sourced from South
Africa. Swaziland’s inflation averaged 14.7% y/y in August,
above 13.3% y/y in July. Although food inflation data is not
readily available, it can be assumed that food prices follow
South African trends. Swaziland has rebased its CPI in April
2007; the food group’s weight rose from 25.3% to 37.7% and the
transport group’s from 7.9% to 8.6% in the index. The greater
weights of these two important groups, which both experienced
price surges, are more reason why inflation is at these high
levels. South Africa’s inflation rate is expected to peak in the
next few months, which should bring some relief.
Interest rates linked to South Africa’s. Swaziland’s
monetary policy focuses mainly on maintaining its 1:1
currency peg to the rand by holding adequate foreign
exchange reserves. The Common Monetary Area rules limit
Swaziland’s policy independence and policy is effectively
imported from South Africa. The Central Bank of Swaziland
did not raise its discount rate in June when the SARB raised
the repo rate to 12%, keeping the discount rate at 11.5%. In
the 2008 MPC statement, the committee argued that a less
restrictive policy may be followed to avoid stifling economic
growth and encourage the agricultural sector, helping to
offset imported food price pressures. Also, higher local
interest rates do not affect prices determined internationally.

Inflation - % y/y Interest rates - %

16 18
14 16
12 14
10 12
8 10
6 8
4 6
2 4
0 2002 2003 2004 2005 2006 2007 2008
2002 2003 2004 2005 2006 2007 2008 Prime rate Discount rate TB rate
Source: Central Bank of Swaziland Source: Central Bank of Swaziland

Depreciation in the offing. The lilangeni is pegged at par to the
South African rand under the CMA agreement. The rand is legal
tender in Swaziland, but not vice versa. Economic conditions in
Swaziland do not affect the exchange rate of the ZAR, only
South African and global economic conditions. The SZL/ZAR is
expected to trade at an average of SZL8.05/USD in the fourth
quarter of 2008 and SZL7.78/USD for the whole of 2008;
SZL8.17/USD in the first quarter and SZL8.12/USD in the
second quarter of 2009; and SZL7.97/USD for 2009. The 12-
month trading range is SZL7.30-8.5/USD. However, South
Africa’s large trade and current account deficits, emerging
markets jitters and global uncertainty from the sub-prime
debacle expose the rand to further weakness.
Sugar production. Sugar is the backbone of the economy,
but recent changes in the global trade regime has meant
that the industry will suffer. European Union sugar prices
continue to fall. Sugar production is also vulnerable to
weather conditions, particularly water for irrigation. Sugar
production has been relatively stable between 2004/05
(597 563 MT) and 2007/08 (631 236 MT), despite being
lower than in 2005/06 (652 735 MT). About half the
production is sold domestically. The value of exports,
however, has risen from E758.4 million to E1 126.0 million
over the same period. Export earnings were boosted by the
weaker exchange rate, but a lower international sugar price
dampened earnings (see the picture gallery below).

Exchange rates – SZL/USD Sugar production

12 MT '000 E million
700 1,200
11 675 1,000
10 650 800
9 625 600
8 600 400
7 575 200
6 550 0
5 04/05 05/06 06/07 07/08
00 01 02 03 04 05 06 07 08 Production Value of exports

Source: Bloomberg Source: Central Bank of Swaziland

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 Standard Bank
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Economics

Swaziland – picture gallery

Real GDP growth - % Sectoral contribution to GDP - %
3.9 Manufacturin
4 g Construction
3.7%
32.0%
2.8
3 Services
2.5 2.2 2.4 49.7%
1.8
2.0 2.0 2.0
2
1.0

0
Agriculture Other
00 01 02 03 04 05 06 07 08f 09f 12.1% 2.5%
Source: IMF Source: IMF
Foreign exchange reserves Trade balance – US$ million
US$ mn Months 2,500
1000 6
900 2,000
5
800 1,500
700 4
600 1,000
3
500
400 2 500
300 0
1
200
100 0 -500
2004 2005 2006 2007 2008 2002 2003 2004 2005 2006e 2007p

Gross reserves Import cover Trade balance Exports Imports

Source: Bloomberg Source: Bloomberg

Government budget balance - % of GDP, including grants Sugar prices – international - Sugar No. 11 contract – US$/lb

12 20
10
8 16
6
12
4
2 8
0
-2 4
-4
0
-6
95 96 97 98 99 00 01 02 03 04 05 06 07 08
03/04 04/05 05/06 06/07 07/08p 08/09p

Source: IMF Source: Bloomberg

Weights of consumer price index (CPI) constituents Capital account – US$ million

400
Education
Transport Health
5.38%
8.60% 3.58% Other 200
12.34%

0
Furniture
11.88%
-200

Clothing Food -400

Housing 37.73%
6.16%
14.33% 2002 2003 2004 2005 2006e 2007p
Trade balance Current account
Capital & financial account
Source: IMF Source: IMF

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Tanzania
Second round effects of high oil prices. Headline inflation
increased from 9.5% y/y in July to 9.8% y/y in August mostly
driven by high energy and transport costs. The food component
(which constitutes about 55.9% of the consumer price index –
CPI- basket) declined marginally from 11.2% y/y in July to 11.1%
y/y in August as the country enters the harvest period. Energy
prices (which constitute about 8.5% of the CPI basket) increased
from 12% y/y in July to 12.7% y/y in August as the country
continues to import its full quota of oil. Second-round effects of
high energy prices are now evident as transport costs increased
from 5.5% y/y in July to 9.9% y/y in August. Thus we expect
softer oil prices and increased food supply to bring some relief
through 2008. We have revised our inflation forecast downwards
to average 9.5% in 2008.
Inflation - % y/y
15
Upside risk to interest rates. The declining interest rates
environment experienced since November 2007 seems to be
fading. Having declined from a high of 15.14% in October
2007 to 4.95% in May 2008, the 91-day Treasury bill (T-bill)
rate increased to 8.62% in August 2008. As developments in
T-bill yields continue to provide an anchor for market-
determined interest rates, the yields for all maturities have
started increasing as well. The overall weighted average T-
bill rate also increased from a low of 7% in May to 9.47% in
August 2008. The high inflation environment should lead to
an increase in nominal lending rates through 2008, which
should help to maintain stable real interest rates. Overall, the
risks to interest rates are on the upside. We forecast the
end-year T-bill rate to reach 11.4%.
Interest rates - %
25

12 20
15
9
10
6
5
3 0

0 2005 2006 2007 2008

Central Bank Rate
2005 2006 2007 2008 Comm.Bank Lending Rate
Overall Non-food Food Treasury Bills
Source: National Bureau of Statistics Source: Bank of Tanzania

The shilling exchange rate to strengthen through 2008. As
the country enters the agriculture harvest period, we expect the
currency to strengthen throughout the remainder of the year.
Export performance continues to determine fluctuations in the
exchange rate as the economy is heavily dependent on the
agriculture and commodity sectors. Increased demand for tourism
services and continued inflow of donor aid should also support a
strong currency. As the boom in the world commodity market
continues, this should further improve mining exports thereby
strengthening the currency. The shilling appreciated from an
average of TZS1 160.33 per US dollar in
August to an average of TZS1 159.16 per US dollar in September
2008.
Tourism leading the export sector improvements.
Tanzania’s economy depends heavily on the agriculture,
commodity and tourism sectors. Trade, hotels and
restaurants (accounting for about 25% of the country’s forex
earnings) should continue to grow as tourism remains
strong. The low-cost high volume tourism strategy continues
to attract more visitors into the country, thereby generating
more revenue. Travel receipts, of which tourism is 80%,
dominates the export sector followed by gold receipts.
Infrastructural bottlenecks will have to be addressed if the
tourism sector is to reach its full potential. Following the
aggressive marketing drive by the tourism authorities, we
expect a continued increase in tourism services in the
medium term.

Exchange rates Exports (year ending May) – US$ million

TZS per USD Millions of US$
1350 240 1200
1300 200 1000
1250 160 800
1200 120 600
1150 80 400

1100 40 200

1050 0 0

2005 2006 2007 2008 Travel Gold Traditional Manufactured

exports exports
Volume of transactions (US$ millions) RHS
Exchange rate (TZS per USD) 2005 2006 2007 2008
Source: Bank of Tanzania Source: Bank of Tanzania

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Economics

Tanzania – picture gallery

Real GDP growth - % Sectoral contribution to GDP - %
17.5% 5.4% 6.9%
10 9.2% 5.4%
7.8 7.8 8.1
7.2 6.9 7.4 7.1 5.8%
8
6.7
1.5%
6 3.8%
44.7%
4.1%
4
Agriculture Trade, Hotels & Restaurants
2
Financial & Business Services Manufacturing
Public Admin. Transport & Comm.
0 Construction Electricity and water supply
2002 2003 2004 2005 2006 2007 2008f 2009f Mining and quarrying Owner occupied dwellings

Source: National Bureau of Statistics Source: National Bureau of Statistics

Foreign exchange reserves, import cover Trade account – US$ million

US$ millions months 3000

3000 8 2000
1000
2500 7 0
2000 6 -1000
-2000
1500 5
-3000
1000 4 -4000
500 3 -5000
-6000
0 2
2000 2001 2002 2003 2004 2005 2006 2007e
2000 2001 2002 2003 2004 2005 2006 2007e
Exports Imports Trade deficit
Gross reserves Import cover (rhs)
Source: Bank of Tanzania Source: Bank of Tanzania

Government deficit – % of GDP Services receipts – year ending May - US$ million
0 1200
-1 1000
-2
800
-3
600
-4
-5 400
-6 200
-7 0
2000 2001 2002 2003 2004 2005 2006 2007 2008f Transportation Travel (Tourism) Other Services

2004 2005 2006 2007 2008

Source: Bank of Tanzania & IMF
Source: Bank of Tanzania

Weights in consumer price index (CPI) constituents Capital account - US$ million
6.9% 6.4%
1.4% 6000

55.9% 8.5% 2.1% 5000

2.1%
4000
9.7%
2.6% 2.1% 3000
0.8%
2000
1.5%
Food Drinks and Tobacco 1000
Clothing and Footwear Rents
Fuel, Power and Water Furniture & Household Equipment
0
Household Operations&Maintenance Personal Care & Health
Recreation & Entertainment Transportation 2000 2001 2002 2003 2004 2005 2006 2007e
Education Miscellaneous Goods and Services

Source: National Bureau of Statistics Source: Bank of Tanzania

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Uganda
Overall inflation subdued by slowing food inflation. Overall
inflation slowed to 15.2% y/y in September from 15.8% y/y in
August on the back of a deceleration in food inflation to 30.7% y/y
from 33.6% y/y. Nevertheless, food prices are expected to remain
high because despite favourable domestic production, demand
from neighbouring countries, including Kenya, is projected to
deplete food stocks and thus maintain upward pressure on food
prices in the short term. The softening of the international oil price
is expected to reduce the inflationary pressures stemming from
the transport and fuel sub-indices. Nevertheless, overall inflation
is projected to remain stubbornly high for longer and persist until
the second quarter of 2009.
Central bank governor signals lower interest rates. The
Bank of Uganda’s outlook for inflation is positive and the
governor suggested in September that there were grounds
to cut interest rates, especially as the inflationary pressures
are exogenous. Following the suspension of Treasury bill
auctions in July, which prompted a spike in the 91-day
Treasury bill yield of 9.1%, the yield eased to 8.6% at the
end of September. The rediscount rate was higher in the
third quarter of 2008 than it was in the first half of the year,
implying a tightening of monetary policy as liquidity
increased. This reflects the upward pressure of sterilisation
on interest rates, mainly through debt issuances.

Inflation - % y/y Interest rates - %

18 28
15 24
20
12 16
9 12
6 8
4
3
0
0 2004 2005 2006 2007 2008
2005 2006 2007 2008 91 Day TB (yield)
Weighted average lending
Overall Core (excl. food, fuel, electricity and utilities) Rediscount
Source: Uganda Bureau of Statistics Source: Bank of Uganda

The shilling stabilises. The 1.4% depreciation of the Ugandan
currency against the US dollar in September, compared to
August, to UGX1 646.27/USD, in relation to its appreciation
against the rand and the euro reflects the effect of a stronger US
dollar. The Ugandan shilling has benefited from large inflows of
foreign exchange due to sound export earnings, capital inflows
and aid. The Bank of Uganda’s preference for foreign exchange
sales for open market operations, made possible by the prudent
accumulation of international reserves to about six months of
import cover, has also boosted the value of the shilling. The
moderation of the oil price is likely to ease pressure on the
current account, which is shilling friendly. The risk to the shilling
is investors’ increasing risk aversion to emerging market assets.
Large foreign exchange inflows raise liquidity. Strong
foreign exchange inflows due to growing capital inflows and
buoyant export revenue have proven a challenge for the
authorities to sterilise, hence the breaching of the indicative
target on base money at the end of 2007 and end of March
2008. The acceleration of money supply growth over the
past two years from the teens to the 20-30% range on an
annual basis is testimony to these increasing inflows. To
accommodate the permanent effect on the level of food and
fuel prices, the base money target for June 2008 was
upwardly adjusted. To subdue second-round effects, the
authorities have based their target for June 2009 on a
conservative core inflation projection of 5%.

Exchange rates Money supply growth - % y/y

2700 360 50
2500 300
40
2300 240
30
2100 180
1900 120 20
1700 60 10
1500 0
0
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
UGX/USD UGX/EUR UGX/ZAR (rhs)
M3 (Broad money) Base money
Source: Bloomberg, Standard Bank est. Source: Bank of Uganda

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 Standard Bank
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Economics

Uganda - picture gallery

Real GDP growth - % Sectoral contribution to GDP - %
10 Community Agriculture
Transport & services
communicati 30%
24%
8 on
10%
6
9.4 8.9 9.1 9.2
4 8.6
Mining and
6.6 Hotels & quarrying
Restaurants 1%
2 3% Construction
11% Electricity Manufacturin
Wholesale & and water g
0 1%
Retail Trade 9%
2004 2005 2006 2007e 2008p 2009f 11%
Source: Uganda Bureau of Statistics, IMF, Standard Bank est.
Source: Uganda Bureau of Statistics

Foreign exchange reserves – import cover Trade account – US$ million

US$ million months 1200 0
3000 7.5
1000 -90
2500 7.0
800 -180
2000 6.5
1500 6.0
600 -270

1000 5.5 400 -360

500 5.0 200 -450

0 4.5 0 -540
2004 2005 2006 2007 2008 2005 2006 2007 2008
Forex reserves Import cover (rhs) Exports Imports Trade balance (rhs)

Source: Bank of Uganda, Bloomberg Source: Bank of Uganda

Government budget deficit - % of GDP Coffee prices – US cents per pound
1
200
0
160

-1 120

80
-2
40
-3
0
2004 2005 2006 2007 2008
-4
2005/06 2006/07 2007/08 2008/09p Robusta price (rhs) Arabica price (rhs)

Source: IMF CR No. 08/236 Source: IMF

Weights of consumer price index (CPI) constituents Capital and financial account – US$ million
4000
16.8%
14.7% 3000
27.2%
2000
12.8%
1000
14.8% 0
4.5%
-1000
Food 4.7%
Beverages and tobacco -2000
Clothing and footwear 4.4% -3000
Rent, fuel and utilities Capital FDI and Other Short-term
Household and personal goods account portfolio investment investment
Transport and communication (MDRI) investment
Education 2005/06 2006/07 2007/08 2008/09p
Source: Uganda Bureau of Statistics Source: IMF CR No. 08/236

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Group Economics

Zambia
Inflation accelerates to 14.2% y/y in September. The persistent
incline of inflation from 13.2% y/y in August was due to food, fuel
and transport prices. Food inflation remained steady at 16.2% y/y
in September. However, the rent, fuel and lighting sub-index’s
inflation accelerated to 17.7% y/y from 14.5% y/y, while the
transport and communication sub-index’s inflation surged to
11.5% y/y from 5.3% y/y. The price of fuel is very high and feeds
into transport costs and final goods and services. To ease the
pressure of high fuel prices on production and inflation, the
authorities cut import tariffs on diesel and petrol to 7% and 36%
from 15% and 45% respectively. This is projected to ease fuel
prices and transport costs; however, the approaching lean
season will keep food prices elevated in the short term.
Interest rates edge up. Uncertainty surrounding Zambia’s
imminent presidential elections, the global financial turmoil
and high inflation contributed to the increase in short-term
interest rates in September. In recent years, yields on
Treasury instruments have been largely influenced by
portfolio capital inflows. Over the past year, portfolio
investors have sought longer dated instruments, thus easing
the downward pressure on yields. However, in the second
half of 2008 these flows slowed, hence the increase in the
yield on the 91-day Treasury bill to 12.5% in September
from 10.9% in March. Even the sticky lending rate edged up
to 25.6% in September. Interest rates are expected to
moderate over the short term as uncertainty recedes.

Inflation - % y/y Interest rates - %

25 50
20 40
15 30
10
20
5
10
0
0
-5
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Overall Food Non-food Average lending rate BoZ rate 91-Day TB

Source: National Bureau of Statistics Source: Bank of Zambia

Kwacha weakened by pre-election jitters and a softer copper
price. The Zambian currency depreciated against three hard
currencies, namely the US dollar, euro and rand, in September.
The kwacha’s loss in value is due to a slowdown in portfolio
capital inflows on account of uncertainty surrounding domestic
events, turmoil in global financial markets and the 15.4% m/m
drop in the copper price to USD6 388 per tonne at the end of
September. Accelerating inflation has also aggravated the value
of the kwacha, as the inflation differential with that of its trade
partners widens thus spurring a weaker currency. A stable
kwacha is projected in the short term on the grounds that policy
continuity is all but assured under new leadership. Although the
copper price has softened it is not expected to fall off.
M3 growth slows on the back of softening growth of
foreign currency deposits. The slowdown in the growth
rate of broad money (M3) to 29.2% y/y in July from 34.6%
y/y in January is reflective of a significant deceleration in the
growth of the foreign currency deposits constituent of broad
money to 10.1% y/y in August from 57.3% y/y in January.
The weakness of the US dollar in the first half of the year
and relatively lower appetite for Zambian debt partly explains
this year’s decline in foreign currency deposits. Reserve
money’s cumulative increase target of ZMK22 billion was
met in June 2008; however, at the end of August, the ceiling
target for September was exceeded by ZMK127 billion, likely
due to the challenge of fully sterilising net purchases of
foreign exchange.

Exchange rates Money supply growth % y/y

6600 900 50
6000 750 40
5400 600 30
4800 450 20
4200 300
10
3600 150
0
3000 0
2004 2005 2006 2007 2008 -10
2004 2005 2006 2007 2008
ZMK/USD ZMK/EUR ZMK/ZAR (rhs) Broad money (M3) Reserve money
.
Source: Bloomberg, Standard Bank Group est. Source: Bank of Zambia

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 Standard Bank
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Economics

Zambia – picture gallery

Real GDP growth - % Sectoral contribution to GDP - %
Community, Agriculture,
7 Financial
Real Estate Social & Forestry &
Institutions Personal Fishing
6 & Business
& Insurance Services 13%
services
7% 8%
5 9% Mining &
Quarrying
4 8%
Transport,
3 6.2 6.1 6.2 Storage & Manufacturi
5.4 5.2 5.7 ng
Communica
2 tions 11%
9%
1 Restaurants Electricity,
Wholesale Gas &
, Bars & Constructio
0 & Retail Water
Hotels n
trade 3%
2004 2005 2006 2007e 2008f 2009f 3% 11%
18%
Source: IMF, Standard Bank est. Source: Central Statistical Office

Foreign reserves & import cover Trade account – US$ million

1500 4.0
1500
1200 3.5
1200
900 3.0 900
600 2.5 600

300 2.0 300

0
0 1.5
2004 2005 2006 2007 2008 -300
2005 2006 2007 2008
Forex reserves (US$ millions)
months of import cover Imports Exports Trade balance
Source: Bloomberg, Bank of Zambia Source: Central Statistics Office
Government budget balance - % of GDP Copper prices – US$ per tonne
20
500
16
400
12
300
8
200
4
100
0
0
-4
2004 2005 2006 2007 2008
2005 2006 2007 2008p 2009f

Source: IMF CR No 08/187 Source: Bank of Zambia

Weights of consumer price index (CPI) constituents Stock market indicators

4.1 ZMK billions
4.9 4000 22000
0.8 9.6 3500 20000
8.2 3000 18000
8.5 57.1 2500 16000
6.8
2000 14000
1500 12000
1000 10000
500 8000
Food & beverage Clothing & footwear 0 6000
Rent, fuel, lighting Furniture & household goods 2005 2006 2007 2008
Medical care Transport & communication LuSE All Share Index (Jan 1997=100)
Recreation & education Other goods & services
Market Capitalisation (rhs)
Source: Central Statistical Office, Standard Bank Group est. Source: Lusaka Stock Exchange

Page 27
 Standard
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Zimbabwe
Hyperinflation environment remains a major challenge. Lack
of foreign exchange, shortages of goods and services and a
resultant increase in food prices, high global energy prices,
sharp depreciation of the currency and rapid growth of money
supply continue to drive inflation to new record highs. The
government continue to print money to finance quasi fiscal
spending and that is also fuelling the hyperinflation environment.
However, in the absence of any official inflation and monetary
survey data, it remains difficult to quantify the extent of the
country’s economic crisis. Also, in the absence of substantial
productive activities, hyperinflation will continue. The last official
inflation recorded for June 2008 was 11.2 million per cent.
Monetary policy remains restrictive and ineffective.
Continued depreciation of the currency and the
hyperinflation environment remains a major challenge for
the monetary authorities to conduct monetary policy
effectively. Secured overnight accommodation rate remains
unchanged at 8500%. This tight monetary policy
environment has completely crowded out any meaningful
economic activity, as access to credit is severely limited.
The central bank continues to maintain stringent statutory
reserve requirements that impose a heavy administrative
burden on commercial banks. Commercial banks’ lending
remains unprofitable. Overall, real lending rates remain
deeply in negative territory and this should escalate the
hyperinflation environment.

Inflation - % y/y Interest rates - %

10000
12000000 8500
8000
10000000
6000
8000000
4000 3000
6000000
2000
4000000 66.3
0
2000000
2005 2006 2007 2008
0 Prime lending rate
Overnight accommodation (secured)
2006 2007 2008
91-day T-bill
Source: Reserve Bank of Zimbabwe Source: Reserve Bank of Zimbabwe

Depreciating currency. Since the redenomination of the
currency by a factor of 1:10 000 000 000 on 1 August 2008, the
Zimbabwe dollar continues to depreciate significantly. The official
interbank exchange rate depreciated from Z$7.78 per US dollar
on 1 August 2008 to Z$132.30 per US dollar on 30 September
2008. The parallel exchange rate was Z$750 000 per US dollar
on 30 September 2008. Even with the recent political settlement,
foreign exchange management will continue to be a major
challenge to all the efforts to institute any meaningful economic
reforms. Continued shortages of foreign exchange should lead to
a further depreciation of the currency.
Sectoral performance remains dismal. Overall, we expect
the economy to contract by about 7% in 2008 as most
sectors continue to operate below capacity. The country’s
inability to secure essential raw materials, machinery and
equipment should continue to fuel the slump in production in
most sectors of the economy. The agricultural sector
continues to perform dismally. Because the sector has been
the largest purchaser of goods and services (for example,
manufactured products) and the anchor around which
industries and services developed, its poor performance
continues to hinder developments of other sectors.

Exchange rates – Z$ per US dollar Manufacturing output index - 1990=100

160 120
140 100
120
80
100
80 60
60 40
40 20
20
0
0
1996 1998 2000 2002 2004 2006 2008f
4/Aug/08 18/Aug/08 1/Sep/08 15/Sep/08 29/Sep/08

Source: Bloomberg Source: IMF

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 Standard Bank
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Group Economics
Economics

Zimbabwe – picture gallery

Real GDP growth - % Sectoral contribution to GDP - %

0 19% 20%
4%
-2 8%
-4
18% 22%
-6
-8 9%
-10
-12
-14 Agriculture Mining & quarrying
-16 Other Transport & comm.
2000 2001 2002 2003 2004 2005 2006 2007 2008f Distribution Finance & insurance
Manufacturing
Source:IMF & Standard Bank Source: Central Statistical Offices

Foreign reserves – months of import cover International trade – exports shipment by sector US$ million

1.4 Tobacco
1.2 Mining
1.0
Manufacturing
0.8
Hunting
0.6
0.4 Horticulture
0.2 Agriculture
0.0
0 100 200 300 400 500
2003 2004 2005 2006 2007
2008H1 2007H1
Source: IMF
Source: Reserve Bank of Zimbabwe

Government deficit (excluding grants) - % of GDP Mineral production - kilograms

0 25000
-2
20000
-4
15000
-6
10000
-8
5000
-10
0
-12 2001 2002 2003 2004 2005 2006 2007 2008Q1
2001 2002 2003 2004 2005 2006 2007 Platinum Gold

Source: IMF Source: Zimbabwe Chamber of Mines

Weights of consumer price index (CPI) constituents Monetary Survey - %

Education, Restaurants
2.9% and hotels, Miscellaneous 200000
Recreation and 1.5% goods and
culture, 5.7% services, 3.9% Food and non- 160000
Communication alcoholic
, 1.0% beverages,
31.9% 120000
Transport, 9.8%
80000
Health, 1.3% Alcoholic
beverages and
Rents plus tobacco, 4.9% 40000
furniture, Housing water
household electricity gas Clothing and 0
equipment & and other fuels, footwear, 5.7%
maintenance, 16.2% 2006 2007 2008
15.1%
M3 Claims on Private Sector
Source: Reserve Bank of Zimbabwe Source: IMF

Page 29
 Standard Bank Group Economics
Standard Bank Group Economics

Group Economics
Goolam Ballim – Group Economist
+27-11-636-2910 goolam.ballim@standardbank.co.za
South Africa
Johan Botha Shireen Darmalingam Jeremy Stevens Danelee van Dyk
+27-11-636-2463 +27-11-636-2905 +27-11-631-7855 +27-11-636-6242
Johan.botha2@standardbank.co.za Shireen.darmalingam@standardbank.co.za Jeremy.Stevens@standardbank.co.za Danelee.vanDyk@standardbank.co.za

Rest of Africa
Jan Duvenage Anita Last Yvonne Mhango Victor Munyama
+27-11-636-4557 +27-11-631-5990 +27-11-631-2190 +27 11-631-1279
Jan.duvenage@standardbank.co.za Anita.last@standardbank.co.za Yvonne.Mhango@standardbank.co.za Victor.Munyama@standardbank.co.za
Botswana Angola Kenya DRC
Lesotho Ghana Mozambique Nigeria
Namibia Malawi Uganda Tanzania
Swaziland Mauritius Zambia Zimbabwe

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Page 30