January 10, 2020/United Capital Report
Recently, the World Bank published a forecast for Sub-Saharan Africa (SSA) economic growth to rise from 2.4% in 2019 to 2.9% in 2020. This was predicated on improving investor confidence in some large economies, a strengthening cyclical recovery among industrial commodity exporters along with a pickup in oil production, and robust growth among agricultural commodity exporters.
For us, we expect growth in South Africa to remain weak, as cases of load shedding or blackouts continue to drag industrial growth. Also, we expect growth to remain tepid in Nigeria and Angola as both economies remain exposed to the vagaries of the oil market. Election uncertainties may dampen fresh foreign investment in seven countries (Ghana, Ivory Coast, Burkina Faso, Burundi, Seychelles, Tanzania, and Togo) scheduled to hold Presidential elections in 2020.
Nonetheless, we expect growth in the smaller economies to continue to support the region’s growth. Specifically, we project that economic activity in Rwanda will remain supported by export growth (resulting from the Made in Rwanda policy) and continued public investments. Also, we opine that the recent removal of interest rate caps, which have constrained credit supply in Kenya for years, should spur new lending to private sector and impact overall growth positively.
Top African Stories
World Bank cuts Ethiopia GDP forecast to 6.3% for 2020 fiscal year: The World Bank has cut Ethiopia’s economic growth forecast to 6.3% for the 2020 fiscal year, down from an earlier estimate of 9.0%, citing the growing debt burden of state-owned firms and a worsening security situation. Read more
France’s Orange considering IPO of Middle East, Africa operations: French telecoms group Orange is considering a possible stock market flotation of its combined Middle East and Africa operations. Read more
Kenya’s KCB Group injects 5 bln shillings into NBK after acquisition: Kenya’s biggest lender by assets, KCB Group, has injected 5.0bn shillings ($49.31mn) into National Bank of Kenya (NBK), which it acquired last year. Read more
Ivory Coast tax collection up 5% in 2019: Ivory Coast collected 2.25 trillion CFA franc ($3.86 billion) in taxes in 2019, up 4.7% over the previous year, and expects to collect 2.72 trillion CFA francs in 2020. Read more
South Africa’s Absa PMI declines in December after power cuts: South Africa’s seasonally-adjusted Absa Purchasing Managers’ Index (PMI) fell deeper into a contraction in December, following a slump in new sales orders and business activity due to power cuts, the survey showed on Wednesday. Read more
Russia’s VTB sues Mozambique over loan in $2 bln debt scandal: Russian bank VTB is suing a Mozambique state-owned company over $535 million it extended as part a series of loans now at the centre of a $2 billion debt scandal. Read more
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