Factors
shaping Africa’s economy
shaping Africa’s economy
In many parts of
Africa this year, the price of crude oil, which is determined in the international
market, is shaping the way we live our lives and will continue in 2015 and
beyond.
Africa this year, the price of crude oil, which is determined in the international
market, is shaping the way we live our lives and will continue in 2015 and
beyond.
Crude oil prices
have dropped by more than 50% in the last 12 months and the outlook for prices
does not look good.
have dropped by more than 50% in the last 12 months and the outlook for prices
does not look good.
Oil dependant
countries are feeling the pressure. Angola, for example, has announced plans to
borrow $25 billion this year ($15 billion through treasury bills and the balance
via external borrowing) as the country’s revenues take a hit from the steep
drop in crude oil prices. The government has also announced plans to remove fuel
subsidies, which costs the country about $2.2 billion a year and devalue its
currency.
countries are feeling the pressure. Angola, for example, has announced plans to
borrow $25 billion this year ($15 billion through treasury bills and the balance
via external borrowing) as the country’s revenues take a hit from the steep
drop in crude oil prices. The government has also announced plans to remove fuel
subsidies, which costs the country about $2.2 billion a year and devalue its
currency.
In Ghana, the
government announced that it will scrap the remaining of its fuel subsidies by
September 2015 in a bid to reduce expenditure, which has come under pressure in
the face of dwindling crude oil prices. This is after successfully arranging a
billion dollar facility from the IMF.
government announced that it will scrap the remaining of its fuel subsidies by
September 2015 in a bid to reduce expenditure, which has come under pressure in
the face of dwindling crude oil prices. This is after successfully arranging a
billion dollar facility from the IMF.
Nigeria’s
successful and peaceful elections has raised hopes but the new government is
faced with tough decisions to make in the face of dwindling revenues from crude
oil and the resurgence of Boko Haram activities in Northern Nigeria.
successful and peaceful elections has raised hopes but the new government is
faced with tough decisions to make in the face of dwindling revenues from crude
oil and the resurgence of Boko Haram activities in Northern Nigeria.
The new Nigerian
government may be forced to eliminate fuel subsidies, increase tax collection while
delivering on the many welfare projects promised. Meanwhile, economic growth has
slipped in the first quarter in Nigeria while unemployment rate rose to 7.5%
from 6.5% amidst pressure on the country’s foreign reserves and the Naira which
has been devalued by 7.5% in the last six months.
government may be forced to eliminate fuel subsidies, increase tax collection while
delivering on the many welfare projects promised. Meanwhile, economic growth has
slipped in the first quarter in Nigeria while unemployment rate rose to 7.5%
from 6.5% amidst pressure on the country’s foreign reserves and the Naira which
has been devalued by 7.5% in the last six months.
But it is not all
gloomy on the continent. Kenya’s economy is still growing strong though at a
slower pace. The International Monetary Fund (IMF) expects that the economy
will grow at 6.5% this year as against 7% as previously announced dampened by rising
insecurity followed by the tragic Al-Shabab attacks and softening of commodity
prices.
gloomy on the continent. Kenya’s economy is still growing strong though at a
slower pace. The International Monetary Fund (IMF) expects that the economy
will grow at 6.5% this year as against 7% as previously announced dampened by rising
insecurity followed by the tragic Al-Shabab attacks and softening of commodity
prices.
Democratic Republic
of Congo’s economy is another bright spot on the continent with the IMF
forecasting that the country’s economy will expand 9.2% in 2015, which will
make it one of the fastest growing economies in the world.
of Congo’s economy is another bright spot on the continent with the IMF
forecasting that the country’s economy will expand 9.2% in 2015, which will
make it one of the fastest growing economies in the world.
Following new deep
sea recoveries off the South Coast of Tanzania, the country’s current natural
gas reserves have been put at about 55 trillion cubic feet (tcf). This is
expected to attract new investments into the country, creating jobs for many
Tanzanians.
sea recoveries off the South Coast of Tanzania, the country’s current natural
gas reserves have been put at about 55 trillion cubic feet (tcf). This is
expected to attract new investments into the country, creating jobs for many
Tanzanians.
Perhaps, the
biggest news that will shape Africa’s economic future is the announcement that
three existing trade blocks, made of 26 countries with a population of over 600
million people will create the largest free-trade zone on the continent.
biggest news that will shape Africa’s economic future is the announcement that
three existing trade blocks, made of 26 countries with a population of over 600
million people will create the largest free-trade zone on the continent.
These trade blocks
are the Southern African Development Community (Sadc), the East African
Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa).
The treaty will facilitate the movement of free goods and services among the
countries and allow preferential tariffs between them.
are the Southern African Development Community (Sadc), the East African
Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa).
The treaty will facilitate the movement of free goods and services among the
countries and allow preferential tariffs between them.
Another good
economic news is the declaration that Liberia is Ebola free and the relative
decline in infection rates among Guinea and Sierra Leone. This is expected to
lead to a resurgence of economic activities not only in the affected countries
but in West Africa and positively affect travel and tourism across Africa
generally.
economic news is the declaration that Liberia is Ebola free and the relative
decline in infection rates among Guinea and Sierra Leone. This is expected to
lead to a resurgence of economic activities not only in the affected countries
but in West Africa and positively affect travel and tourism across Africa
generally.
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