Kenya tipped to profit from South Africa and Nigeria slump

CfcStanbic Bank has tipped Kenya to benefit from the economic slowdown being witnessed in South Africa and Nigeria.

According to the bank’s Economist for East Africa region Jibran Qureishi, with South Africa bracing for sovereign credit downgrade and revaluation of the Nigerian currency looming, Kenya is in pole position to attract investors.

Speaking during the launch of the East Africa Trans-regional Conference, which got underway yesterday, Qureishi said investors may favour Kenya since it is not heavily tied to the events in those two markets.

“South Africa may witness sovereign credit downgrade yet it is viewed as a benchmark for liquidity in capital markets. There has been talk of devaluing the Nigerian naira. I expect many rating agencies to continue to rank Kenya better,” he said.

The two markets, he added, have been crucial in Africa, with the South African economy being used as a barometer of liquidity in African capital markets.

South Africa has been witnessing expanded fiscal deficit as the economy struggles to recover. Last month, credit rating agency, Moody’s, placed South Africa’s sovereign debt rating on review for a downgrade from investment-grade to junk status.

“If this happens, it will deal a blow to the country’s reputation as well as lead to higher costs of accessing credit. This will eventually push up the cost of doing business.”

Against this background and the financial crisis in the Chinese economy, CfC Stanbic has launched a series of inter-regional and cross-border trade to assist its clients to identify business opportunities in different trading blocks.

Through its parent company, Standard Bank, the inaugural conference at Villa Rosa Kempiski hotel in Nairobi, is bringing together investors from Kenya, Uganda, Tanzania, Uganda, Zambia, Malawi and South Africa.

According to Standard Bank head of commercial banking in Africa Manessah Alagbaoso, the region has improved in governance, regulatory measures and infrastructure, making it an attractive bloc.

“The landscape in East Africa has changed to create opportunities for savvy investors who are prepared to make long-term business commitments within the region,” said Alagbaoso.

He added that in moments of economic uncertainty, as is the case with many world economies now, improving trade within the region will be crucial to keep trade volumes high. Commenting on the low trade activity within the East African bloc, Alagbaoso noted that trade within East Africa can be boosted if structural changes are implemented.