Africa Market Update - April 2019

2APRIL 2015 | MARKET UPDATE – AFRICA www.stratlinkglobal.com
A Financial Advisory
Company
APRIL 2019 | MARKET UPDATE – AFRICA www.stratlinkglobal.com
NIGERIA
GHANA 4
9
13
22
RWANDA 26
KENYA
UGANDA
TANZANIA 17
Table of Contents
GHANA
• What next after Ghana exits IMF’s Extended Credit Facility in April 2019?
• Investors toss USD 19 billion at Ghana as it seeks to raise USD 3 billion through
its latest eurobond. What does this mean for Ghana and Africa?
• Why the Cedi’s slide could see Bank of Ghana back-pedal its dovish stance
NIGERIA
• Why surprise monetary benchmark rate slash threatens to leave the economy
exposed to further headwinds
• The yield curve is flattening out. What does this suggest about the economic
environment?
KENYA
• Government’s Cherry Advance Revolving Fund to boost coffee sector
• MPC holds key rate on stable inflation but adverse weather poses risk
At a Glance
TANZANIA
• Tanzania rebases the economy
• Former prime minister and 2015 opposition flag bearer defects back to ruling
CCM
• Government resumes talks on stalled LNG gas project
UGANDA
• Security and health risks from DRC
• Dry weather risks unsettling low inflation environment
RWANDA
• Growth data underscores Rwanda’s economic outlook
• Rwanda-Uganda row escalates
• SMEs to benefit from cheaper lending
http://mutuamatheka.co.ke/wp-content/uploads/2012/04/001_NAIROBI_WEBREADY_MUTUA-MATHEKA-10.jpg
Nairobi, Kenya
© Mutua Matheka
Cover image:

Value of Disclosed Transactions (USD)
AFRICA DEALS LANDSCAPE
January 2019 – March 2019
Source: PitchBook, StratLink Africa
Deal Activity by Industry (Proportions) Deal Activity by Types (Proportions)
Snapshot of Major Deals
• Botswana based mobile network service provider, Mascom Wireless, was acquired by Econet Wireless for USD 300.0 million on March 7th, 2019
• Online based retail company, Jumia Group, ﬁled to go public on the New York Stock Exchange, on March 12th, 2019, with an anticipated oﬀering
amount of USD 100.0 million
• South Africa based waste management company, Interwaste Holdings, was acquired by Seche Environnement for USD 36.0 million on March 6th,
2019
87.3%
5.1%
2.1%
3.8%
Consumer Non-durables
Others
Nigeria 5,212,650,000
Botswana 300,000,000
South Africa 215,840,000
Kenya 64,470,000
Mauritius 30,700,000
Angola 30,000,000
Zambia 12,000,000
Mozambique 11,200,000
Ghana 9,730,000
Swaziland 3,730,000
Zimbabwe 1,400,000
Egypt 600,000
Somalia 10,000
Communication &
networking
Healthcare Services
1.7%Retail
89.0%
89.0%
2.9%
2.9%
2.6%
2.6%
1.6%
1.6%
3.9%
3.9%
Mergers & Acquisitions Buy Out/LBO Corporate Divestiture
IPO Others

WHAT NEXT AS THE ECONOMY EXITS IMF’S EXTENDED CREDIT FACILITY?
GHANA MARKET UPDATE

State of the Nation Address Focuses on Fiscal
Prudence
The February 2019 State of the Nation address set
the stage for the months ahead on the right note.
Focusonrevenueleakageattributabletonumerous
tax exemptions suggests the government is
according fiscal prudence the focus it deserves
from a policy standpoint. As will be discussed in
the Business Environment section, Ghana’s tax
revenue to GDP ratio falls below the sub-Saharan
Africa average pointing at significant gaps which
the economy needs to address. Depending
on how sealing these leakages is pursued, it is
bound to create pressure in the country’s political
environment as the government targets products
exempted from Value Added Tax.
Doing away with a number of tax exemptions could
see the country’s headline inflation breach the
target ceiling of 10.0% and reverse the economy
back to double digit inflation.
POLITICAL OUTLOOK
Beyond the IMF Programme: What Lies Ahead?
Ghana is set to exit the International Monetary
Fund’s Extended Credit Facility (ECF) Programme
in April 2019. For most, it is unclear what this
portends for the economy especially in light of
the rapid deterioration by the Cedi witnessed in
March 2019. In our view, this presents a test for
Ghana to remain committed to the reforms that
have defined the period 2015 – 2018 which has
been characterized by reforms underpinned by
the IMF ECF facility. Notably:
• Ghana will be under pressure to maintain
the fiscal deficit on a sustainable path having
trimmed it from a high of 8.0% of GDP in 2016
to 6.0% in 2018
• Ghana will also be hard pressed to keep its tax
revenue to GDP ratio at a favorable level with a
viewtowardingoffdebtsustainabilitypressures.
Presently standing at 17.3%, it is important that
the country raises this to the sub-Saharan Africa
average of 18.0%. We expect the country’s fiscal
space to remain relatively tight going forward
with a likelihood of growing pressure for tax
hikes to meet this objective
BUSINESS ENVIRONMENT
Fiscal Deficit as a Percentage of GDP
Source: IMF, StratLink Africa
GDP: USD 42.9 Bln | Population: 28.0 Mln
GHANA
Government’s estimate of amount
attributable to tax exemptions in 2018 in
view of import duty, import Value Added Tax
and domestic Value Added Tax
USD 905.0 Mln
Headline Inflation
Source: Ghana Statistical Service, StratLink Africa
8.0%
8.5%
9.0%
9.5%
10.0%
10.5%
11.0%
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2015 2016 2017 2018

The Cedi has since come under immense pressure
which has seen it approach the six units to the
greenback in March 2019 despite the gains
reported on the foreign exchange reserves front.
Coming at a time when the global market has
been relatively quiescent due to a reversal to
dovish signals from the USA Federal Reserve, this
suggests that Cedi is undermined by domestic
factors such as a weak external position. Since the
surplus reported in March 2018, Ghana’s current
account balance has deteriorated placing the Cedi
in a difficult position.
ECONOMIC OUTLOOK
We still expect the Bank of Ghana to engage a
hawkish stance within the first half of 2019. It is
important that the present bout of headwinds
be arrested to create a stable macroeconomic
environment.
Foreign Exchange Reserves and Months of
Import Cover
Current Account Balance (USD Mln)
Cedi to USD Exchange Rate
Source: Ghana Statistical Service, StratLink Africa
Source: Bloomberg, StratLink Africa
Source: Bank of Ghana, StratLink Africa
GHANA
Central Bank Set to Reverse Accommodative
Stance
In January 2019, we pegged our outlook on
Ghana’s economy on potential adverse effects
from a deteriorating monetary environment and
a tightening fiscal space. We specifically tabled
a case for a looming hike in the central bank’s
benchmark rate in the first meeting of 2019 with a
view to arresting pressures in the foreign exchange
environment. In its January 2019 meeting,
however, Bank of Ghana slashed the benchmark
rate by 100.0 bps to 16.0%, its lowest point since
November 2013.
Margin by which the Cedi has
depreciated since
the start of 2019
Ghana’s current account deficit
as at December 2018
(the latest reporting)
10.2%
USD 1,105.0 Mln
4.0
4.2
4.4
4.6
4.8
5.0
5.2
5.4
5.6
5.8
6.0
02-Jan-19 02-Feb-19 02-Mar-19
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
5,500.0
6,000.0
6,500.0
7,000.0
7,500.0
8,000.0
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Foreign Exchange Reserves (USD Mln)
Months of Import Cover - Right Hand Axis
-1,200.00
-1,000.00
-800.00
-600.00
-400.00
-200.00
0.00
200.00
400.00
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18

Source: Bloomberg, Reuters, StratLink Africa
GHANA
2018 and 2019 Eurobond Issuances
Sovereign Yield Curve
External Borrowing (USD) as Planned for 2019
DEBT MARKET UPDATE
USD 3.0 Billion Bond Attracts USD 19.0 Billion
Appetite
Over-subscription of the country’s USD 3.0 billion
Eurobond, attracting an order book to the tune
of USD 19.0 billion, comes as a strong signal
that despite frontier and emerging market debt
burden fears, appetite for perceived high risk
issuers remains solid. Important for Ghana is the
fact that the issuance came against the backdrop
of the country’s conclusion of the International
Monetary Fund’s final review Extended Credit
Facility support arrangement with the fund lauding
the reforms undertaken by Ghana. We expect
Ghana’s performance in the recent issuance to
spur appetite for a return to the international debt
market by peer frontier markets, especially in light
of the March 2019 USA Federal Reserve meeting’s
dovish stance.
Will Domestic Yields Nudge Downwards?
In 2019, the government is projected to raise USD
2.9 billion through external borrowing. With the
Eurobond issuances having attracted bids to the
tune of USD 19.0 billion, the government of Ghana
could accept much more than it sought to raise and
reduce the need for domestic borrowing. Lower
appetite for domestic debt would play a significant
role in helping the government bid down yields in
the domestic market and free more commercial
bank credit for lending to the private sector.
Amount Issued Size of Order Book
2019 3.0 Bln 19.0 Bln
2018 2.0 Bln 5.5 Bln
Amount that Ghana targeted raising
through issuance of a sovereign bond in the
international market in 2019
USD 1,868.0 Mln
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
91
Day
182
Day
1
Year
2
Year
3
Year
5
Year
7
Year
10
Year
Jan-18 Jun-18 Dec-18
233,573,
302.64
826,812,
663.67
1,868,63
3,684.79
Programme Loans Project Loans Sovereign Bond

Ghana Stock Exchange (Feb 2018 - March 2019)
Ghana Stock Exchange
EQUITY MARKET UPDATE
Market Weighed Down by Wave of De-Listing
Abundance of caution by investors continues to
sag the Ghana Stock Exchange Composite Index to
new lows each day. In the month under review, the
index slid to as low as 2,411.0 points as at March
18th, 2019. The market has been weighed down
by developments such as the March 2019 de-
listing of the Pioneer Kitchenware Ltd owing to the
company’s adverse financial position.
Coming just eleven months since the de-listing
of Golden Web Ltd and Transaction Solutions
Ghana, the latest de-listing is like to have added
to investors’ jitters about the state of a number of
companies trading at the exchange. Golden Web
Ltd and Transaction Solutions Ghana were both
de-listed on account of a deteriorated financial
position.
GHANA
Proportion by which the Ghana Stock
Exchange Composite Index has declined, as at
March 18th, 2019, since the start of 2019
Margin by which the Ghana Stock
Exchange Composite Index has declined in
the twelve months to March 18th, 2019
3.5%
25.6%0.0
5.0
10.0
15.0
20.0
25.0
2,000.0
2,200.0
2,400.0
2,600.0
2,800.0
3,000.0
3,200.0
3,400.0
3,600.0
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Feb-19
Millions
Volume - RHS
Ghana Stock Exchange Composite Index
0.0
5.0
10.0
15.0
20.0
25.0
2,000.0
2,200.0
2,400.0
2,600.0
2,800.0
3,000.0
3,200.0
3,400.0
3,600.0
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Feb-19
Millions
Volume - RHS
Ghana Stock Exchange Composite Index

NIGERIA MARKET UPDATE
WHY SURPRISE MONETARY POLICY RATE SLASH COULD EXPOSE THE ECONOMY TO MORE HEADWINDS

Budget 2019 Takes Centre Stage
On the whole, the political environment remains
broadly favorable with the country benefiting
from a relatively peaceful and stable electoral
cycle. Focus now shifts to the 2019 budget and
what it portends for the policy environment
for the months ahead. A few issued are worth
highlighting:
• The Federal Government, through the Finance
Minister, has indicated that it has no intentions
of altering the benchmark price of oil from USD
60.0 barrel. Given the trend exhibited by the
OPEC basket price since the start of the year,
this sounds like a favorable position to take. The
OPEC basket price averaged USD 62.9 in the first
quarter of 2019. We will, however, continue to
monitor the price of oil in case we witness a
reversal in price akin to the dip that took place
in Q4 2019
• The prevailing tight fiscal space still remains a
challenge for the country’s policy environment
especially as Nigeria prepares to meet the
demands of a higher minimum wage in the
public service in 2019. We expect to see a rise
in recurrent expenditure in the months ahead in
this regard
POLITICAL OUTLOOK
NIGERIA
Unemployment Rate
Index Suggests Business Environment Remains
Resilient
The Purchasing Managers Index (PMI) posted
slight improvement in March 2019 compared to
the preceding month. It suggests the pulse in the
business environment improved slightly in the
month under review.
There were notable gains in production and
employment levels within the economy. This is a
welcome indicator especially when coupled with
the favorable political environment following the
February 2019 poll.
Slowdown in Sales
The Purchasing Managers’ Index, however, points
at a contraction in sales in March 2019, compared
to the preceding month, and this could present
a challenge going forward if it protracts. This is
a likely indicator of subdued purchasing power
especially as inflation continues to trend in the
double digit horizon.
BUSINESS NEWS ENVIRONMENT
Source: Central Bank of Nigeria, StratLink Africa
Purchasing Managers’ Index
Purchasing Managers’ Index
OPEC Basket Average Price (USD)
Source: OPEC, StratLink Africa
Month Purchasing Managers' Index
Jan-19 58.5
Feb-19 57.1
Mar-19 57.4
60.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
55.0
55.5
56.0
56.5
57.0
57.5
58.0
58.5
ProducƟon level Employment level
Feb-19 Mar-19

NIGERIA
Central Bank in Surprise Rate Slash
The slash of the monetary policy rate in the March
2019 took us by surprise on three accounts:
• The Central Bank’s forward guidance, from
November 2018, pointed at a bias for a hawkish
stance in 2019. Whereas the March meeting
is only the second for 2019, we believe that
engaging a dovish stance piles pressure on the
monetary environment at a time the economy
can ill afford it
• Whereas the Naira began 2019 on a favorable
footing gaining traction against the greenback,
we view the move to slash the benchmark rate
as victory lap taken too early. In our view, the
Naira has made relatively marginal gains since
the year started and should be given room to
consolidate the gains made. We also view the
Naira’s strengthening as being one driven, in
part, by the position taken by the USA Federal
Reserve in its March 2019 meeting
ECONOMIC OUTLOOK
Naira to USD Exchange Rate
Headline Inflation
Growth in Credit to the Private Sector
Source: Central Bank of Nigeria, National Bureau of Statistics,
StratLink Africa
• Inflation in Nigeria remains in double digits
despite the prolonged monetary tightening
cycle. Against a prescribed band of 6.0%- 9.0%,
headline inflation stood at 11.3% in February
2019. Headline inflation has not been within its
target band since April 2015 and perhaps begs
greater focus from a monetary policy standpoint
Does the Growth Argument Suffice?
The Central Bank expects that engaging an
accommodative stance will help prop the
economy’s fragile growth. Whilst this argument
has a basis, it is contingent upon banks’ willingness
to unlock credit to a private sector that is still
deemed weak with a non-performing loan ratio
last reported at 14.8%.
Margin by which the Naira has appreciated
against the greenback between January 1st
2019 and February 28th, 2019
0.7%
356.0
358.0
360.0
362.0
364.0
366.0
368.0
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Jan-15
Jun-15
Nov-15
Apr-16
Sep-16
Feb-17
Jul-17
Dec-17
May-18
Oct-18
Headline InﬂaƟon Monetary Policy Rate
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Jan-15
Jun-15
Nov-15
Apr-16
Sep-16
Feb-17
Jul-17
Dec-17
May-18
Oct-18

Nigeria Stock Exchange
Nigeria Oil and Gas Stocks Index
Source: Debt Management Office Nigeria, StratLink Africa
Yield Curve Flattens Out
The sovereign yield curve has been notable in
March 2019 for two considerations:
• Spreads between long-term and short-term
papers are declining and as a result, the
sovereign yield curve is flattening out. Noting
that this trend has been brought about by a
faster rise in the short-term end of the curve
than has been witnessed in the long-term, it is
a likely signal that investors are wary of a likely
upward nudge in inflation in the near-term
hence demanding a higher return. This could
help augment our view that untamed inflation
is viewed as one of the key challenges facing
Nigeria’s economic environment presently
• We view this, the flattening out of the sovereign
yield curve, as an indicator that the market was
anticipating a hike in the March 2019 monetary
policy meeting. Failure to quell inflation fears in
the market could see the sovereign yield curve
invert again as it had during the 2016/17 period
during which the economy was grappling with
a recession. Over the next one month, we will
be closely monitoring the Naira to see how it
behaves in light of the latest monetary policy
stance
DEBT MARKET UPDATE
NIGERIA
Exchange Cedes Ground in March 2019
In line with our expectation, the Nigeria Stock
Exchange 30 Index lost ground in March 2019
after gaining steadily since the start of the year. Of
note, the market was weighed down by stocks in
the oil and gas segment whose index came under
pressure at towards the end of March 2019 over
uncertainty on the price of oil.
Margin by which the Nigeria Stock
Exchange 30 Index has lost, year-
to-date, as at March 25th, 2019
0.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
91
Day
182
Day
364
Day
2
Year
4
Year
7
Year
10
Year
Mar-30-2019 Feb-28-2019 Oct-30-2018
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
1,200.0
1,250.0
1,300.0
1,350.0
1,400.0
1,450.0
1,500.0
Jan-19 Feb-19 Mar-19
Millions
Volumes - RHS
Nigeria Stock Exchange 30 Index
0.0
0.5
1.0
1.5
2.0
2.5
3.0
250.0
260.0
270.0
280.0
290.0
300.0
310.0
320.0
Jan-19 Feb-19 Mar-19
Millions
Volumes - RHS Oil & Gas Index

MPC HOLDS CBR BUT POLICY TIGHTENING MAY BE AROUND THE CORNER
KENYA MARKET UPDATE

POLITICAL OUTLOOK
KENYA
Government Initiative to Boost Coffee Sector
The government has announced a new initiative,
the Cherry Advance Revolving Funds program,
where coffee farmers will receive advanced
payment for their crop to help them cover the cost
of harvesting the highly sought after beans.
TheUSD30millionrevolvingfundwillallowfarmers
to settle expenses including the delivery of beans
to factories and once sold, the government will
be reimbursed with an additional three percent
interest charge.
Coffee export growth has lagged behind that of
other key crops and with this latest program the
government hopes to see coffee exports trend
upwards.
Key Exports USD Mn
Compound Annual Growth Rate in Key Exports
(2011-2018)
Source: CBK, StratLink Africa
Calls for the Impeachment of the DP Deepen
Political Divides
Siaya Senator James Orengo has called for the
impeachment of Deputy President William
Ruto on the grounds that he has regularly been
linked with corruption allegations which justify
a full investigation into the same. This comes as
MPs backing the Deputy President accuse the
opposition leader, Raila Odinga, and his supporters
of using the impeachment to further the ODM
leader’s political ambitions.
The handshake of 9 March 2018 between Raila
Odinga and President Uhuru Kenyatta brought
calm to the political landscape after an extended
period of tension brought about by the elections
in 2017 and subsequent mock swearing in of the
opposition leader.
Since then, those in Raila’s camp have pushed
for a referendum proposing alterations to the
constitution including a switch to a parliamentary
system of government. The referendum, if it
goes ahead, is likely to take place in the course of
the year and if successful, will likely weaken the
position of the Deputy President.
Risks to Outlook
The partnership between Raila and President
Uhuru aimed to create a favorable environment
within which focus on policy can be nurtured
over the next few years especially in light of the
adopted Big Four agenda which lays emphasis
on manufacturing, housing, healthcare and food
security.
However, Deputy President Ruto is believed to
be forging new alliances to support his bid for
the presidency in 2022 with the implication of
this being that President Uhuru is likely to have
difficulty passing policies, such as the Big Four
agenda, while trying to appease the competing
demands of political supporters in the National
Assembly and Cabinet.
0
500
1,000
1,500
2,000
2018
2017
2016
2015
2014
2013
2012
2011
Coﬀee Tea HorƟculture

KENYA
ECONOMIC OUTLOOK
Stable Inflation sees MPC Hold Key Rate
Inflation has remained very close to the Central
Bank of Kenya’s (CBK) target of 5.0% for several
quarters coming in at 4.1% in February this year,
down from 4.7% in January and 5.7% in December
last year.
The Monetary Policy Committee (MPC) met on
27 March 2019 where they decided to hold the
key rate at 9.0%, making it a year since the last
change in the Central Bank Rate (CBR). Stable
food prices and lower energy prices contributed
to subtle supply side pressure on inflation in the
opening two months of the year while demand
side pressure also remained muted with Non-
Food-Non-Fuel (NFNF) inflation coming in below
5.0%1
in February.
Headline Inflation and the CBR
Credit to Private Sector % Change y-o-y
CBK Ready to Argue for Repeal of Rate Cap Law
Recently, three judges on the High Court Bench in
Nairobi ruled that section 33B of the Banking Act
2016, the law that puts a ceiling on interest rates
thatistiedtotheCBR,isunconstitutional.However,
the High Court suspended the enforcement
of the ruling for a year to allow lawmakers the
opportunity and time to adjust the law.
An appeal against the same high court ruling will
now see the CBK bring forward evidence to build
a case supporting their claim that the law capping
interest rates hinders its ability to effectively
manage the economy via monetary policy and
thus impedes the execution of the Central Bank’s
mandate.
The CBK may, however, find it challenging to argue
its case seeing that inflation has remained in check
for a prolonged period of time. With the recent
spell of dry weather that may continue into April,
food prices may go up in the medium term and
require an upward adjustment to the CBR down
the line. The MPC will be banking on a favorable
outcome to the appeal against the High Court
ruling to enable it effectively direct monetary
policy.
As of Feb-19: the length of time that
inflation has remained within the CBK’s
target range of 2.5%-7.5%
18 months
1
CBK
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
CBR InﬂaƟon
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18

Yield Curve Drops Again
Rates on the yield curve for government securities
fell in the month to 26 March 2019. With inflation
having fallen for the second month in a row, to
4.1% in February down from 4.7% in the previous
month, expectations of weak price pressures in
the near term have contributed to the observed
change in yields.
The MPC’s latest decision, made in March, to keep
the key rate at 9.0% was informed by a lack of both
supply side and demand side pressures however,
adverse weather conditions may see inflation’s
trajectory change as the likelihood of food prices
going up in the medium term increases. In this
event there will be upward pressure on yields as
the MPC may be forced to tighten monetary policy
in response to higher price pressures.
The possible repeal of the cap on interest rates,
dependingontheoutcomeoftheappealagainstthe
High Court ruling that the law is unconstitutional,
will likely have significant consequences on yields,
as it may see banks redirect capital away from
government securities and towards loans thereby
lowering demand for T-Bills and Bonds.
Bloomberg BVAL Yields Index
DEBT MARKET UPDATE
KENYA
NSE 20 Falls for the Second Month in a Row
Equity prices continued to fall in the month of
March 2019, with the NSE 20 share index closing
at 2,840.9 on the 27th of the same month,
representing a loss of 7.5% since this year’s peak
of 3,070.3 on 13 February 2019.
The CMA will begin receiving applications from
FinTech firms to join its Regulatory Sandbox, a
tailored regulatory environment allowing for
live tests of innovative products, which have the
potential to deepen or broaden domestic capital
markets, in a controlled environment.
Nairobi Securities Exchange 20 Share Index
NSE 20 index percentage change
in month to 27 March 2019
NSE 20 index percentage change
in year to 27 March 2019
-3.1%
-27.5%
8.4%
8.8%
9.2%
9.6%
10.0%
10.4%
10.8%
11.2%
11.6%
12.0%
12.4%
12.8%
13.2%
13.6%
3M 1Y 3Y 5Y 8Y 10Y 20Y 30Y
26-Mar-19 27-Feb-19
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2,700.0
2,750.0
2,800.0
2,850.0
2,900.0
2,950.0
3,000.0
3,050.0
3,100.0
01-Feb-19
08-Feb-19
15-Feb-19
22-Feb-19
01-Mar-19
08-Mar-19
15-Mar-19
22-Mar-19
Millions
Volume Last Price

TANZANIA MARKET UPDATE
TANZANIA REBASES THE ECONOMY

Former Prime Minister Defects back to CCM
The early March defection by the opposition
coalition Ukawa presidential flag-bearer in the
2015 election and the former prime minister
Edward Lowassa, back to the ruling CCM serves
to weaken the already frail opposition in Tanzania
and strengthen the ruling CCM’s hold on power.
Ukawa, secured about 40.0% of the votes.
Notwithstanding President Magufuli’s clear win,
with 58.5% of the votes, the 2015 election marked
CCM’s smallest ever margin of victory and the
opposition’s best ever electoral performance.
Which Way for Tanzania’s Opposition
The pre-poll period stimulated factionalism
within the CCM and the poll was largely viewed
as a milestone for the emergence of genuine
multi-party politics and heralding a new dawn for
Tanzania’s opposition. However, the gains made by
theoppositionhave slowlyreversed.We opinethat
Mr Lowassa’s decision to realign his loyalties with
CCM is rooted in his inability to bring about any
material change in the political landscape during
his stint in the opposition. Despite him leading a
fairly robust cross-party coalition, the opposition
movement remains weak and struggles to pose a
formidable threat to CCM, catalyzed by the ruling
regime’s unrelenting efforts to actively restrict
the democratic space for political opposition by
frustrating them and prompting several defections
to CCM as they sought to reap benefits of
incumbency. Consequently, we anticipate a poor
electoral performance by the opposition in the
2020electionandwithMrLowassa’sdeparture,the
opposition’s prospects appear bleaker. Separately,
Mr Lowassa was considered a CCM stalwart before
2015 and his return should aid in mending existing
intra-party divisions. Likewise, his return reinforces
our forecast of another election win for CCM. The
defection seems to be a mutual reconciliation
between the former prime minister and the
President, on this account, a dispute between the
two leaders for the CCM’s presidential candidacy
in 2020 is therefore, unlikely.
POLITICAL OUTLOOK
TANZANIA
Government Resumes talks on LNG Gas Plans
Tanzania is looking to increase investments in the
energy sector which, are crucial in the realization
of the country’s objective to attain the industrial-
driven economy. Government has since raised
concerns over the slow development of the
approximately USD30.0 billion liquefaction facility
being executed by a consortium of international oil
companies led by Royal Dutch Shell. Negotiations
between the government and international oil
companies, which started in 2017, have so far
failed to lead to a deal. The facility forms a key part
of Tanzania’s plans to monetize its vast natural gas
reserves projected to deliver about 15000.0MW
by 2025 hence, calling for expedited development
of local processing capabilities. As discussed in
our previous reports, Tanzania trampled peers in
attracting Foreign Direct Investment (FDI) in 20171
and we assess that the LNG export terminal has
the potential to significantly boost FDI inflows and
consequent foreign receipts with potential higher
economic growth. However, following major gas
discoveries offshore, government has worked to
incorporate new provisions to govern the sector
through the Petroleum Act 2015. Nevertheless,
several layers of fiscal and regulatory uncertainty
coupled with significantly expanded role for the
state may dull investor appetite. As a matter of fact,
this aforementioned uncertainty is considered a
key barrier to the progress of the LNG project with
a resultant lag effect on the country’s energy sector
plans, if not addressed. In this regard, government
has recently reported of plans to conclude LNG
projecttalks.Thelatestroundoftalks,areexpected
to commence in April and conclude in September,
2019 and are viewed as a critical step in the
process of building towards a final investment
decision for the project which has been stalled
by regulatory delays. The expected trickle-down
effect from commencement of construction of the
plant would be a two percentage point increase in
real GDP growth.
1
UNCTAD

Tanzania Rebases Economy
Tanzania rebased the economy to capture
structural changes in the economy and more
recent price changes of products, changing its
nominal GDP base year to 2015 from 2007,
resulting into an increase in the nominal size of the
country’s economy by an average of 3.7% a year
during 2015-17. Consequently, the country’s GDP
size as of 2015 rose to (TZS 93.4 trillion) USD 40.2
billion at current prices from (TZS 90.8 trillion)
USD 38.7 billion², using 2007 as the base year. This
is a minimal increase compared with the previous
rebasing exercise in 2014, when the incorporation
of newly discovered natural gas caused GDP to
expand by about 34.0% for 2013.
Due to the rebasing exercise, the share of
agriculture to GDP for the year 2015 decreased
to 26.7% compared to 28.6% in the 2007 base
year. However, the share of industry and services
increased to 24.5% and 40.4% under the 2015
base year compared to 24.0% and 39.5%. We do
not expect major shocks to the economy in view
of a new base year. Nonetheless, the rebasing
is bound to have an upward knock-on effect on
nominal GDP forecasts and could result in reducing
the current-account deficit, fiscal deficit and public
debt ratio relative to GDP.
Tourism Earnings Rise
According to the latest Monthly Economic Review,
tourism receipts, Tanzania’s highest export earner,
increased to USD 2.5 billion in 2018, up by 8.8%
year on year. The rise is attributed to rising visitor
arrivals as a result of the government’s tourism
promotion efforts ─the government has adopted
a multi-pronged approach to facilitate an increase
in tourism through the expansion of the country’s
offerings, as well as an upgrade of supporting
infrastructure. Tourism receipts accounted for
25.7% of exports earnings in 2017, and this share
increased to 29.2% in 2018. The government’s
focus on tourism stems from the sector’s
importance for the country as a foreign-exchange
earner, especially in the context of volatility in the
value of goods exports.
The value of goods exports for Tanzania declined
by 11.1% year on year in the year ending January
2019, to USD 4,243.0 million, reflecting a broad-
based decline in both non-traditional and
traditional goods. The biggest decline came from
cashew nuts, after the government procured the
entire harvest to protect farmers’ interests amid
a low price environment, but failed to export
it. Therefore, the focus on tourism will help to
diversify the country’s export base. We remain
confident about the prospects for the tourism
industry in the near term, but sustaining growth
over the longer term will require sustained all-
round improvements. Scaling up the industry will
require more than public financing—inadequate
infrastructure and a complex tax regime deter
private investment. Be that as it may, in light of
the government’s commitment to the industry
in recent years, these challenges are not
insurmountable
Services Receipts by Category (USD/Mln)
Changes in Broad Economic Activities (USD/Bln)
ECONOMIC OUTLOOK
Source: Bank of Tanzania, StratLink Africa
Source: National Bureau of Statistics, StratLink Africa
TANZANIA
2
TZS 1= USD 0.000426428
0.0
10.0
20.0
30.0
40.0
50.0
GDP at
current
prices
Agriculture Industry Services
Base year 2007 Base year 2015
2247.7 2490.4
1175.5
1222.6
437.2
336.4
0.0
1,000.0
2,000.0
3,000.0
4,000.0
2018 2019
Tourism Transport Other services

Undersubscription on Government Securities
The short and long term government securities
market continue to post bid undersubscriptions.
The 91 and 182 Day papers were undersubscribed
with three and eight bids, respectively. While the
364 Day paper attracted higher investor interest
with 84 bids, principally owing to its favorably
higher yield. Nonetheless, the interbank rate
trended northwards, albeit marginally, rising by
10.0bps to 5.1% between February and March,
reflecting tightening liquidity conditions. While
inflation remained unchanged at 3.0%, in the
period under review.
Yields for short-term government securities
posted mixed trends; the 91 Day paper’s yield rose
marginally by 0.1% to 3.9%. On the other hand, the
182 Day and the 364 Day papers’ yields declined
albeit marginally, by 10.0bps and 20.0bps to 5.1%
and 9.1%, respectively in the period under review.
Interbank Rate
T -Bill Yield Trend
TANZANIA
DEBT MARKET UPDATE
10-Year Treasury Bond Undersubscribed
The 10 years Treasury bond auctioned mid-
March attracted bids worth USD 28.0 million
(TZS63.2 billion) compared to the USD 37.1 million
(TZS87.0 billion) that the government was seeking,
reflecting approximately 60.4% subscription rate.
Most of the auctions in the year to date received
low demand with the exception of the 20-year
instrument. Nonetheless, the yield rose to 15.1%
compared to 14.4% during the December auction
and 15.1% in the September 2018 session.
Likewise, the weighted average coupon rate
increased to 14.1% compared to 13.9% and 13.5%
in the sessions held in December and September,
2018, respectively.
Shilling Maintains Resilience
The local currency has in recent months faced
pressure from declining hard currency inflows
from Tanzania’s major export earners, tourism and
agriculture sectors. Nonetheless, the local unit,
held firm against the greenback, year-on-year, and
depreciated marginally by 90.0bps, month-on-
month, to close March at 2,341.9 units.
Shilling vs USD, month-on-month
Tenure Coupon Subscription rate
10-Year 11.4% 60.4%
20-Year 15.5% 292.5%
5-Year 9.2% 62.7%
7-Year 10.1% 54.0%
2-Year 7.8% 71.6%0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0.0
20.0
40.0
60.0
80.0
100.0
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Feb-19
Price(Red)
VolumeinTZSMln
0.0%
5.0%
10.0%
15.0%
20.0%
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Feb-19
91 Day 182 Day 364 Day
2,290.0
2,300.0
2,310.0
2,320.0
2,330.0
2,340.0
2,350.0
2,360.0
2,370.0
25-02-19
04-03-19
11-03-19
18-03-19
25-03-19

Bourse Ends the Month on a Sour Note
The Dar es Salaam Stock Exchange recorded a
total turnover of USD 12,182.7 from 149,190
shares traded in 29 deals on 23rd March,
2019 compared to a turnover of USD 75,324.7
from 62,162 shares traded in 44 deals on 23rd
February, 2019. Consequently, the bourse stayed
in the red in the period under review, with the
key benchmark indices trending southward. The
Tanzania All Share Index shed off 2.5% and 11.0%,
month-on-month and year-on-year, respectively,
while the domestic Tanzania Share Index moved
down 1.7%, month-on-month to close the month
at 2,091.9 units. Tanzania Breweries Limited (TBL)
and the self-listed Dar es Salaam Stock Exchange
(DSE) emerged as top movers. Local investors
dominated both the buying and selling sides, as
foreign investors stayed away from trading.
All Share Index, year-on-year
TANZANIA
All Share Index Change,
month-on-month, as at
25th March, 2019
All Share Index Change,
year-on-year, as at 22th
March, 2019
-2.5%
-11.0%
Sector Indices
Sector Indices Stay in the Red
The sector indices closed the month in the red.
The Industrial and Allied Index closed at 4,883.9
points, down by 2.1% while the Banking Index
closed at 2,103.9 points, reflecting a 1.6% drop.
Likewise, the Commercial Services Index declined
by 0.6% to close at 2,255.0 points.
Tanzania Launches Gold Market Exchange
TanzaniawilljoinotherAfricancountries;Botswana
and South Africa, to have its own gold exchange
which, is set to increase revenues and help curb
gold smuggling. The facility is also expected to
provide reliable market for small and medium
scale miners in the region. Government has taken
a number of measures to address challenges faced
by small and medium scale miners in the country.
Some of the measures includezero rating the Value
Added Tax (VAT) from 18.0% as well as withholding
tax from the previous 5.0%. Tanzania is ranked
fourth in gold production in Africa after South
Africa, Ghana and Mali and the recent launch will
go a long way in improving gold receipts, a major
export earner.
1,500.0
1,700.0
1,900.0
2,100.0
2,300.0
2,500.0
2,700.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
Price(Red)
VolumeinTZMillions
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
Industry and
Allied
Commercial
Services
Banking
Mar-19 Feb-19

ADVERSE WEATHER RISKS INFLATIONARY PRESSURE
UGANDA MARKET UPDATE

Trouble in Neighboring DRC
The government is having to deal with risks from
the Democratic Republic of Congo (DRC) on
multiple fronts with the spread of violence and
disease being key threats.
Security Risks
The DRC went through its first democratic transfer
of power with Felix Tshisekedi taking over from
Joseph Kabila as President after elections last
year. Fears of civil unrest following the disputed
election were partly justified however, the
Congolese government’s continued lack of control
in provinces bordering Uganda, such as Nord-Kivu,
has enabled continued violence among multiple
armed groups for years including the notorious
Allied Democratic Forces (ADF) who have carried
out attacks in both countries and proclaimed
allegiance to the Islamic State.
Health Risks
An Ebola outbreak was declared in August 2018
and has led to numerous casualties. As of the end
of last year, Uganda was home to over a third of
the 814,975 Congolese refugees fleeing violence,
posing a serious threat of the deadly disease
spreading across the border.
Members of Parliament in the ruling party, the
National Resistance Movement (NRM), recently
green-lighted a motion that will see the incumbent
be the sole candidate representing the party in
the 2021 presidential elections, paving the way
for Museveni to continue his reign. The President
has overseen a boost in economic performance
over recent quarters and will be keen find lasting
solutions to the rising security and health risks
from the DRC.
POLITICAL OUTLOOK
UGANDA
Will Electronic Payments Catch up to Mobile
Transactions?
AsUganda’seconomyhasbecomemoredeveloped
there has been increasingly high adoption of
electronic payments and a move towards lower
reliance on cash for transactions, although the
latter remains the favorite mechanism through
which to exchange value.
As the popularity of electronic payments grows
it becomes important to have structures in place
that safeguard financial stability. Uganda’s National
Payment System (NPS) policy framework, that was
approved by the Cabinet in December 2017 and
recently endorsed by the Minister of Finance, aims
to minimize risk within payment systems, increase
efficiency and ensure consumer protection.
While electronic payments have grown, they
lag behind mobile payments in terms of both
volume and value. The ease of access offered
by mobile payments have made them appeal to
the informal economy and enabled them grow
exponentially and the government hopes that
the implementation of the NPS policy will see
electronic payments follow suit.
Mobile and Electronic Payments Volumes and Values
Q219-Q319
Note: Electronic payments cover transactions in
local currency.
Source: BoU, StratLink Africa
1
WHO
cases of Ebola in the DRC’s
latest outbreak¹
1,000
895.2
1.0
9,172.9
1,044.4
0.0
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
Mobile Payments Cheques, EFT
Credits & Debits
Volumes (Mn) Values (USD Mn)

Adverse Weather Poses Risk to Inflation
In their latest meeting, held on 9 February 2019,
the Monetary Policy Committee (MPC) decided to
retain the CBR at 10.0%, where it has remained
constant since October 2018, prior to which it was
1.0% lower.
The Bank of Uganda (BoU) has over the recent past
taken a dovish monetary policy stance, cutting
the key rate by 8.0% between January 2016 and
September 2018, thus supporting improved
economic activity over the same period.
Upon inspection of the inflation breakdown, it is
evident that the price of food has played a major
role in keeping overall price pressures in the
economy subdued with food crops and related
items inflation averaging negative 2.4% in the
twelve months ending February 2019.
According to the Climate Prediction and
Application Centre (ICPAC)², rainfall patterns
between October last year and now indicate the
prevalence of moderate to severely dry conditions
over much of the Greater Horn of Africa (GHA).
The dry weather was, to a large extent, caused by
the Tropical Cyclone “IDAI”, over the Mozambique
Channel, which led to much lower moisture influx
into the equatorial region. ICPAC predicts that in
CBR and Inflation
Inflation Decomposed, y-o-y Growth
Average for Mar-18 to Feb-19
ECONOMIC OUTLOOK
UGANDA
April 2019 there is a high likelihood of seeing drier
than average conditions over much of Uganda.
If forecasts are correct, the prevailing weather is
likely to have a negative impact on crop production
in Uganda which in turn is likely to lead to higher
food prices and upward pressure on inflation.
The economy has been performing well with
real GDP growth accelerating to 6.8% in the
third quarter of last year, up from 5.2% in the
previous quarter. Together with the government’s
expansionary fiscal policy, in the form of the
Second National Development Plan (NDP II), there
will continue to be tailwinds to economic activity
over the medium term.
All things considered, there is a likelihood that the
MPC will feel the need to tighten monetary policy
by the close of the year in order to keep price
growth in check however, they will be weary of
suffocating credit growth and as such are unlikely
to increase the CBR drastically this year.
2
Part of the Intergovernmental Authority on Development (IGAD)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Headline InﬂaƟon Central Bank Rate
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Food crops
and Related
Items
Core Energy Fuel
and UƟliƟes
Headline InﬂaƟon

Equity Prices Edge up
The All Share Index rose by 0.8% between the first
and 29th of March, 2019.
President Museveni met with MTN Group’s
President and CEO Rob Shuter at the World
Economic Forum in Davos, where he is likely to
have ramped up pressure for the company to
increase local shareholding through a listing on
the Uganda Securities Exchange. The local unit
remains resilient and more stable against the
dollar, relative to 2018.
Yield Curve Drops
Rates on the yield curve for 27 March 2019 were
low, across the entire maturity spectrum, relative
to rates for the yield curve dated 18 January 2019.
Inflation in February rose to 3.0%, up from 2.7%
in the previous month, but still remains below the
Bank of Uganda’s target.
We anticipate that the medium term may see
added pressure on prices, given the adverse
weather conditions and the impact these can have
on food prices. Additionally, the economy’s strong
performance in recent quarters is bound to drive
demand and likely to lead to higher core inflation.
All factors considered, there is a likelihood that the
MPC will increase interest rates in the course of
the year to deal with inflationary pressures, and
in that event there will likely be upward pressure
on yields.
All Share Index
UGX to USD
Source: Uganda Securities Exchange, StratLink Africa
EQUITY MARKET UPDATEDEBT MARKET UPDATE
UGANDA
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
18.0%
3M 6M 1Y 2Y 3Y 5Y 10Y
18-Jan-19 27-Mar-19
3,620.0
3,640.0
3,660.0
3,680.0
3,700.0
3,720.0
3,740.0
01-Jan-19
08-Jan-19
15-Jan-19
22-Jan-19
29-Jan-19
05-Feb-19
12-Feb-19
19-Feb-19
26-Feb-19
05-Mar-19
12-Mar-19
19-Mar-19
26-Mar-19
1,749.31,735.2
29-Mar-19
01-Mar-19

GROWTH DATA UNDERSCORES RWANDA’S STRONG ECONOMIC OUTLOOK
RWANDA MARKET UPDATE

Rwanda-Uganda Row Escalates
The row between Rwanda and Uganda has
escalated, prompting the intervention of Kenya’s
President Kenyatta in a bid to resolve the
stalemate which not only hurts the two nations
if left to escalate, but also threatens trade and
regional integration, more so, of the East Africa
Community (EAC). Rwanda tops in trading with her
peers accounting for 58.0% of EAC’s primary and
manufactured goods followed by Uganda at 31.0%,
Kenya at 23.0%, Burundi at 17.0% and Tanzania at
10.0%. The tiff between the neighbors which has
been simmering for years, was recently aggravated
by Rwanda’s decision to close its borders with
Uganda, especially hampering cross-border trade.
Moreover, Rwandan businesses are pushing for
abandonment of the Northern Corridor ─the key
transport channel that runs from Mombasa port
through Uganda ─in favor of the Central Corridor
from Dar es Salaam port through Tanzania. The
chief executive officer of MTN Uganda was among
those deported last month deported on alleged
“incitement of violence” and “compromising
national security”. The deportation led to a flare-
up in the already strained bilateral relationship
following a series of controversial arrests in 2018
echoing similar accusations concerning national
security and espionage. Moreover, bilateral
relations have been exacerbated by a series of
important official appointments by Uganda which
were seen by Rwanda as unsympathetic to their
interests. Thus far, such issues have been quickly
diffused by both sides through talks owing to
their reciprocal strategic and economic interests;
Uganda is Rwanda’s third-largest source of goods
imports globally and the largest in Africa. We
project periodic strains in diplomatic relations
between Uganda and Rwanda. Be that as it may,
we do not expect these row to manifest into
economic restrictions or aggressive confrontation
as we expect Rwanda and Uganda to resolve issues
swiftly and amicably. Overall, Rwanda’s political
outlook remains stable and bilateral relations with
Uganda, underpinned by strong trade ties, will
remain cordial.
POLITICAL OUTLOOK
RWANDA
SMEs to Benefit from Cheaper Lending
Small and Micro Enterprises (SMEs) in Rwanda
are set to benefit from the approximately USD
32.3 million credit line secured from the European
Investment Bank by the Bank of Kigali, the largest
commercial bank by total assets in Rwanda. The
objective of the credit line is to provide affordable
and long-term business financing for SMEs in
key sectors of energy, manufacturing, trade,
agriculture, transport and tourism. Lack of access
to finance is one of the biggest bottlenecks to
creating a vibrant private sector.
The intervention is timely as it should accelerate
private sector investment which is crucial to
creating jobs and unlocking opportunities
to enhance business success. Available data
indicates that nine out of ten new jobs worldwide
are created by small businesses. In this regard,
government has an important role in reforming
the institutional environment, providing regulatory
frameworks and fostering competition and other
market-oriented policy actions to support SME
growth. Both directed lending programmes and
risk-sharing arrangements can have positive
effects on SME access to finance and growth.
Comparative MSME Finance Gap (2017)
Source: IFC, StratLink Africa
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Rwanda
Kenya
Tanzania
Uganda
Ethiopia
GDP (USD/Bln) MSME Finance Gap/GDP (RHS)

Q1 Benchmark Rate Maintained, Supported by
Strong Economic Outlook
In its previous monetary policy committee (MPC)
meeting in February, the central bank retained the
benchmark rate at 5.5% on the back of moderate
exchange rate pressures and resultant subdued
inflationary pressure, improving trade balance and
overall stronger economic growth. Official data
indicates that 2018 annual real GDP grew at 8.6%
and exceeding the previously projected target of
7.2%. The growth is a build-up of 10.4% growth
registered in Q1, 6.8% for Q2, 7.7% for Q3 and
9.6% growth for Q4. The annual expansion was
mainly on the back of a stronger-than-expected
expansionintheconstructionsub-sectorwhich,has
benefited from increasing government investment
in infrastructure development. Likewise, good
performance in other key sectors boosted growth;
agriculture grew by 6.0% owing to impressive
harvest and livestock products; industry by 10.0%
mainly boosted by the construction activities and
manufacturing which, increased by 20.0% and
13.0%, respectively. While services grew by 9.0%
supported by growth in transport which rose by
16.0%, in the period under review.
Benign Inflationary Uptick Expected
After high base effects led to annual deflation in
2018, of 0.3%, we expect consumer prices to pick
up in the medium term as base effects wear off.
ECONOMIC OUTLOOK
RWANDA
Source: National Bank of Rwanda, StratLink Africa
Real GDP Trends, year-on-year
EAC Annual Inflation Trends
Franc vs USD, year-to-date
The subdued inflation notwithstanding, the Franc
has remained volatile in recent months, creating
jitters and prompting the central bank to issue
a statement to allay these concerns. The value
of the greenback against the Franc has been on
an upward trend for the last two years moving
from about Rwf852.0 to the greenback in 2017 to
Rwf883.0 to the greenback as of December 2018.
The Franc which, has depreciated by 1.3% year-to-
date, appreciated by 0.2% in March to Rwf 902.3
to the greenback. The depreciation is principally
attributed to the structural trade deficit between
imports and exports. The economy has witnessed
improved export performance but at a slower
rate relative to the growth of imports. In 2018,
the formal trade deficit rose by 12.4%, supported
by a 9.5% rise in the import bill that outweighed
the 5.5% increase in export earnings. The Franc
is expected to weaken further in the short to
medium terms but at a moderate rate.
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
0.0%
5.0%
10.0%
15.0%
2015 2016 2017 2018 2019f
Agriculture Industry
Sevices GDP (RHS)
0.0%
5.0%
10.0%
15.0%
20.0%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019f
Rwanda Kenya
Tanzania Uganda
880.0
885.0
890.0
895.0
900.0
905.0
910.0
Jan-19
Jan-19
Jan-19
Jan-19
Jan-19
Feb-19
Feb-19
Feb-19
Feb-19
Mar-19
Mar-19
Mar-19

RWANDA
T Bill Yields
Yields Decline ad Liquidity Eases
In 2018, four bonds ─3, 5, 10 and 15-year─ were
successfully issued with an average subscription
levelof227.8%.Liquidityconditionsandthemacro-
environment have remained relaxed in line with
the monetary policy stance, confirming positive
developments in monetary policy transmission
mechanism: The interbank rate maintained a
downtrend declining by 20.0bps to 5.4% between
January and February, 2019. While inflation
declined further to 0.8% in February down from
1.0% in January, 2019. Consequently, short-term
yields declined in the period under review. The
91 Day, 182 Day and the 364 Day papers’ yields
declined by 0.3%, 0.4% and 0.3% to 5.5%, 7.2%
and 8.2%, respectively, in the period under review.
The government securities remain the preferred
choice for investors relative to equities.
Franc gains Ground against the Greenback
The Franc has, largely, been volatile since the
beginning of the year (as discussed in detail in
the Economic Section), but gained some ground
against the greenback in March to appreciate,
albeit marginally, by 20.0bps to 902.3 units to the
greenback.
DEBT MARKET UPDATE
Rwanda All Share Index year-on-year
All Share Index change month-on-
month, as at 22nd, March 2019
Franc appreciation, month-on-month,
as at 25th, March 2019
Franc depreciation, year-on-year, as at
25th, March 2019
All Share Index change, year-on-
year, as at 22nd, March 2019
3.9%
0.2%
-5.5%
1.9%
Bond Trading Boosts Activity at the Bourse
Statistics from the Rwanda Stock market show
that equities and bonds worth USD 484.0 million
(Rwf 436.5 billion) have been issued since
establishment of the Exchange in 2011. Out of this,
21.1% represents total equity trading while the
remaining 79.9% represents bond trading, mainly
dominated by government. The IFC became the
first international outfit to issue a 5-year inaugural
bond at the Rwanda Stock Exchange, a big boost
to investor confidence in the Exchange, while I&M
Bank is the only local company that has issued a
cooperate bond worth USD 1.1 million (Rwf 1.0
billion). The gestures notwithstanding, activity at
the bourse remains low owing to poor liquidity.
Liquidityhurdlescanberesolvedthroughincreased
profitability by listed companies to attract trading
by potential investors. Nonetheless, the debut of
private pension schemes which, are mandated
to invest part of their wealth in capital markets,
should boost trading at the bourse in future. The
All Share Index gained by 3.9% month-on-month
and 1.9%, year-on-year, to close March at 136.0
units.
3.0%
5.0%
7.0%
9.0%
11.0%
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
91 Day 182 Day 364 Day
129.0
131.0
133.0
135.0
137.0
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19

StratLink in the News:
Mainstreaming Impact Investing as an Asset Class
In the period under review, StratLink’s Director for SME and Impact Finance, Julio De Souza, gave commentary on the
sidelines of the 2019 Africa DealMakers awards in which StratLink emerged second in the category of ‘Financial Advisors
(Deal Flow) in East Africa’. In this video, Julio speaks to impact investment as an asset class of growing popularity in the
region and why such is the case.
“Increasingly, more mainstream investors are interested in impact investment as an asset class. It’s a way for investors
to unlock value which is not only monetary but more importantly impact oriented”
Julio De Souza
Investing in East Africa’s Food and Beverage Space
StratLink’s Managing Partner, Konstantin Makarov, spoke to The Africa Report on matters regarding investing in East
Africa’s food and beverage sector. Backed by a rising population, growing incomes and changing evolving consumer
habits, investors are increasingly viewing food and beverage as a green shoot ripe well positioned to provide a landing
pad for long-term presence in East Africa.
“We are also big believers in the food value chain that starts with primary farming and ends
with restaurants, and everything in between.”
Konstantin Makarov

STRATLINK - AFRICA TEAM
Konstantin Makarov - Managing Partner
konstantin.makarov@stratlinkglobal.com
Dina Farfel - Partner
dfarfel@stratlinkglobal.com
Julio De Souza - Director of SME and Impact Finance
julio.desouza@stratlinkglobal.com
Kyle Drexler - Vice President - Transaction Advisory Services
kyle.drexler@stratlinkglobal.com
Benson Njeri - Senior Analyst
benson.njeri@stratlinkglobal.com
Gianluca Storchi - Senior Research Analyst
gianluca.storchi@stratlinkglobal.com
Sophia Sifuma - Research Analyst
sophia.sifuma@stratlinkglobal.com
James Livingstone - Financial Analyst
james.livingstone@stratlinkglobal.com
Peter Mutisya - Director of Graphic Design
peter.mutisya@stratlinkglobal.com
Sandra Kayaki - Administration Specialist
sandra.kayaki@stratlinkglobal.com
STRATLINK AFRICA LTD - WHO WE ARE
StratLink is an Africa focused financial advisory company
with Capital Raising Advisory, Corporate Advisory and
Market Research as our core business lines. We believe in
the growth potential of sub-Saharan African economies and
partner with our clients to execute their vision by providing
quality services and access to capital. We recognize
opportunities in the region and connect the fastest growing
middle market companies with leading global investment
banks, private equity firms and family offices. We value the
importance of making informed decisions and leverage our
regional knowledge to the advantage of our clients.
Sub-Saharan Africa: In-depth macro and microeconomic
research
Within our purview of coverage are nine economies –
Kenya, Tanzania, Uganda, Rwanda, Ethiopia, Nigeria, Ghana,
Angola and Gabon. We undertake incisive research and
analysis of each of the countries’ macro and microeconomic
environment, debt and equity markets. We also conduct
sector specific research and analysis shedding insight on
market landscape, existing gaps and opportunities as well
as potential challenges.
Our guarantee: Competent team, reliable data
Our research is anchored in a competent and versatile
team traversing the fields of economics and finance with
qualifications from globally recognized institutions. The
team is backed by subscription to reliable databases such
as Business Monitor International, Bloomberg, Thomson
One Research, World Economics and The World Today.
As such, our guarantee is reliable and up to date data in
an increasingly dynamic region. Further, we reach out to
relevant bodies in concerned markets including Central
Banks, ministries and state departments.
Authoritative voice on regional economics
StratLink has become an authoritative voice for commentary
and opinion on issues pertaining to Sub-Saharan African
economies and investment. Reputable media including
CNBC Africa, Nation Media Group, CCTV and Bloomberg
have reached out to the company for opinion and analysis.
Where we are based
Our head office is in Nairobi, Kenya with satellite offices in
New York, Kampala and Kuala Lumpur.

ContactDetails
STRATLINK AFRICA
StratLink - Africa, Limited.
Delta Riverside, Block 4,
4th Floor, Riverside Drive,
Nairobi, Kenya
nairobi@stratlinkglobal.com
www.stratlinkglobal.com
+254202572792

Africa Market Update - April 2019

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