Modest Recovery For African Economies Expected After Tough 2016
2016 was predicted to be a tough year for African economies, and it delivered.
Traditional economic leaders faltered this year amid a storm of falling commodity prices, unpredictable weather and destructive droughts and floods across large swaths of the continent.
Slow economic growth in China, a major investor and trading partner, only added to their challenges.
From Voice of America. Story by Anita Powell.
Nations conventionally seen as being resource-poor, like Ethiopia and Rwanda, maintained higher growth rates — as high as an estimated 8 percent in agriculture-heavy Ethiopia, despite the nation’s worst drought in decades — according to the World Bank.
That growth, said World Bank Ethiopia country director Carolyn Turk, “is impressive especially compared to previous drought situations which often resulted in economic contraction.”
Martyn Davies, managing director of emerging markets and Africa at Deloitte, says these successful African economies focus on expanding and diversifying their economies to attract foreign investment.
He said Kenya remains a regional leader.
“Tanzania is looking somewhat more competitive, largely because of global shifts,” he added. Davies said that Ethiopia also has strong growth trajectory despite political issues in the country.
He also said that Rwanda, which he described as an agile economy, is one of the easiest places to do business in Africa.
Major economic institutions predict some improvement in African economies in 2017 as global commodity prices are expected to rise, but commodity exporters also need to improve their economic policies, said Nigerian economist Nonso Obikili, who researches Nigerian and sub-Saharan economic trends for Economic Research Southern Africa.
“For Nigeria, Angola, Mozambique, getting the basics right in 2017 is very, very important. Getting back to a functional monetary market is very important. Getting back to credibility in terms of the debt issue is very important. So if they get the basics right, then there is a possibility that at least things will start to pick up in 2017,” he said. “… If they don’t, then it might get worse.”
But Davies is less optimistic that resource-dependent countries can change tack at this point.
“I’m afraid now, from a policy perspective, it’s all too late,” he said. “And African economies, by and large, many of them remain price takers rather than price setters. And diversification is essentially about the the skills you have in our economy. Innovation, wealth creation, diversification ultimately follows people. If you’re not creating domestic talent or at least attracting foreign talent into your country, you’re effectively going nowhere.”
Governments do appear to be listening.
Nigerian president Muhammadu Buhari, for one, has made repeated pledges over the past year to end the country’s oil dependence. But diversification doesn’t happen overnight. Economists say it may take a year, or more, for Nigeria to rebound from 2016, and as much as a generation to really break free from crude.
Read more at Voice of America.
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