Since June, the US Federal Reserve has been unwinding its holding of US Treasuries and mortgage-backed securities, with the pace expected to accelerate through September to full speed.
The Fed will be selling US$95bn worth of assets a month from here on. This effectively withdraws liquidity from the market, reducing the amount of US dollars in circulation not only in the US but globally. With quantitative tightening beginning to reach full speed, riskier assets, such as those in frontier markets like Africa, will be heavily impacted.
Africa already suffers from a shortage of dollars and liquidity, and QT by the Fed will only exacerbate this. Capital will flow away from countries deemed to be too risky, and the available capital there is only going to those markets that are deemed the most fundamentally sound.