ECIC IR 2023

Integrated Report 2023

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for ruling parties. Social unrest broke out following the announcement of new President William Ruto in Kenya and there has been disruptions as a result which could negatively impact production, exports, and tourism if it persists into the coming quarter. President Ruto has been on a few official regional visits to improve bilateral and regional relations, while IMF and World Bank funding is expected to support Kenya’s financing needs. Bola Ahmed Tinubu of the ruling All Progressives Congress emerged as a winner in Nigeria’s March 2023 national election. The incoming President won by a narrow margin in a vote filled with criticism. Uncertainty around the introduction of meaningful economic reforms could further prolong economic recovery given the impact of low crude oil production, which remains the mainstay of the country. Back home, President Ramaphosa delivered the State of the Nation Address, followed by an announcement of a few changes to his cabinet, ahead of general elections scheduled for 2024. This included the appointment of the first Minister of Electricity to address power shortages. The Finance Minister also presented a ‘prudent and balanced budget’ including the much-anticipated debt relief programme for energy utility Eskom. The

budget demonstrated National Treasury’s commitment to restoring fiscal discipline by making difficult budgeting trade-offs and maintaining fiscal restraint. However, the weak financial position of state-owned entities and higher than budgeted public sector wage bill may cause fiscal targets to be missed. In February 2023, the country was officially added to the Financial Action Task Force grey list which will result in increased monitoring and deeper due diligence on international transactions. National Treasury has enacted two major pieces of legislation and is involved in ongoing efforts to address areas of strategic deficiencies. Countries generally take one to three years to address deficiencies, and South Africa is targeting to address identified issues by 2024. The South African Reserve Bank (SARB) increased the repo rate by a cumulative 75 basis points in Q1 2023, bringing the repo rate to 7.75 percent, which the SARB views as less supportive of credit conditions. Headline inflation is forecast to remain above the target range until the third quarter of 2023, only reverting to the mid-point of the target range in the fourth quarter of 2024 with the rand expected to remain under pressure in the medium term.

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