Wednesday, 25 March 2015


The life-is-quite-good countries:

Cote d’Ivoire

This appears to be the hottest economy around the continent, boasting among the highest economic expansion rates. It is this year expected to grow at 8% and 7.5% next year, from 8.5% in 2014 and 10.7% in 2012.

The west African country is perhaps aptly hosting the high profile International Conference on the Emergence of Africa, having righted itself under its economist and former IMF big man Alassane Ouattara, following a near-ruinous internal conflict that followed its disputed election of 2010.

It faces another decisive election this October, and successful navigation of this will provide it with a major growth tailwind.


The firm notes that Kenya is an outlier in the region: while it is a net commodity importer, it is one of the few African states where economic growth will pick up robustly.

The World Bank last week raised the country’s growth forecast to 6% this year, from its earlier projection of 4.7%, citing the influence of lower oil prices and a flurry of infrastructure projects. This would reach 6.6% in 2016, and 7% in 2017, with growth having come in at an estimated 5.4% last year.

Capital matches the World Bank’s Kenya forecast for 6% this year, citing increased infrastructure and consumer spending due to lower oil prices, but warns that the current account deficit will remain sizeable due to weak exports, and leaving the country exposed to a tighter US monetary policy.

Political risk is also a concern, including the challenges of devolution, while terrorism could also hurt fragile tourism. Significantly, the country last year raised $2 billion in sovereign debt in the middle of a terror attack, suggesting investors saw past the bumps.


The east African country has seen brisk investment in offshore gas, attracting foreign investors. This could slow due to lower oil prices that may hurt hydrocarbon projects, but the research firm says statements from investors suggest they will stay the course.

Tanzania’s GDP is projected to grow 7.0% this year and in 2016, a slight dip from 7.3% last year. A general election this year and a controversial constitutional review process constitute most of its political risk.


The southern African country has continued its post-conflict regeneration, and like Tanzania has also benefited from huge offshore gas finds. With its current account shortfall at 40% of GDP, the country is more exposed to investor jitters, but will still notch up 7.3% growth this year and next, while it is seen to have grown at an estimated 7.5% last year.

Uganda and Rwandashould also enjoy growth, with the latter buoyed by low oil prices and recovering coffee prices, though it is a double-edged sword—investment in its nascent oil industry should slow down. Rwanda, on the back of reforms a better place to invest than Italy, will benefit from brisk growth due to a lower oil import bill and a focus on infrastructure.

The we-are-just-there countries:

South Africa

Africa’s most diversified economy has been flickering to deceive, the researchers say. Its growth rate picked up late in 2014, but coming from the reactivation of several mines after the end of labour disputes this is seen as a brief rebound rather than a fully-fledged take-off.

The electricity crisis is also hurting the country badly, in addition to weak global growth and low commodity prices, applying a squeeze on its fiscal policy.

The economy is expected to grow only 2%, from just 1.5% last year, and barely recovering to 2.5% in 2016.


Zambia’s main export copper has taken a knock on the international market, but following elections, the new risk has been the fear of mine closures due to proposed mining policy changes.

Its currency has also fallen in recent months, leading to increased inflation, while new political concern also comes in over the health of its new leader.

The economy is expected to grow 4.5% in 2015 and in 2016, its lowest in over a decade. An agreement with the IMF remains key, researchers say.

This category also includes Botswana, Mauritius and Namibia. Botswana’s growth is expected to be steady “if unspectacular”, but constricted by power and water shortages. For Mauritius, weakness in its main trading euro-zone partner is a potential challenge, while Namibia may also catch South African flu, in addition to casting an anxious eye on the euro-zone.

The we’ve-seen-better-days:


The oil price slide has left Nigeria gasping for budgetary breath, suggesting lower spending and higher monetary policy. The currency has fallen by as much as 20% against the dollar over recent months, leading to increased inflation.

The country has been here before: in 1998-1999 the naira lost 80% of its value, on the back of another oil price dip.

The March election in Africa’s most populous country is another elephant in the room, and Capital Economics project subdued growth of 4% this year, from 6.2% recorded last year, and only rising to 5% in 2016. The IMF cut its forecast to 4.8%—the country averaged 9.9% growth over the last 15 years.

On a more positive note, services provide 60% of GDP in Africa’s biggest economy, giving it larger scope for internal solutions.


Ghana has had a tough year, as a fiscal splurge caused economic imbalances to widen sharply, as its currency lost 50% in 2013-2014. Crippling power deficits have only amplified the challenges.

It has since secured a crucial credit line from the IMF, but the future should be bumpy.

“Nevertheless, addressing Ghana’s economic imbalances will be painful. Tighter fiscal policy will hit economic growth, and low commodity prices mean that most of the reduction in the current account deficit will have to come from falling imports, hitting domestic demand,” says Capital.


Angola, Africa’s second largest oil producer, has also taken a battering, given oil accounts for 95% of export earnings. A planned eurobond may help plug holes, but with the forecast that oil prices will be low for the foreseeable future, it may well be applying Band Aid to its economic wounds. Growth is seen at 1.5%.

Diversification appears to be key—the country in 2014 saw its growth mainly from manufacturing and construction.

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