Bright outlook for Southern Africa economies

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By Magreth Nunuhe

Windhoek – Zambia and the Democratic Republic of the Congo (DRC) are the Southern Africa economies to look out for in 2018 and 2019, as they are expected to show the strongest growth of between 3.8 and 4.5%, according to the latest International Monetary Fund (IMF) quarterly update of the World Economic Outlook.

According to the report released by the Institute for Public Policy Research (IPPR), Zambia “is predicted to show stronger growth of 4% (2018) to 4.5% (2019) despite current reports of hidden debts that, if proven true, will dampen economic growth”.

The DRC is projected to expand by 3.8% and 4% over the same period.

“The better growth prospects for these two countries and the whole Sub-Saharan region is based on increased commodity demand and commodity prices with the exception,” noted the report.

Angola’s economy, also showing signs of recovery, is expected to grow by 2.2% and 2.4%, compared to 0.7% in 2017, while the Namibian economy is estimated to grow by 1.5% to 1.7% in 2019.

This will have benefits for the Southern African region through growing demand for goods and services and a more positive outlook of Southern African Customs Union (SACU) revenue.

Growth in the Euro area and the USA have also been revised upwards, while India, as the sixth largest global economy, continues to show the strongest growth of 7.4%, followed by China (6.6%).

However, the IMF cautions that the current favourable conditions would not last for most countries if heightened tensions between Western Europe and the USA on one side and, on the other hand, Russia, due to conflicts in Syria are factored in.Namibia and South Africa joined eSwatini, as the only SACU member states that have signed the African Continental Free Trade Area (AfCFTA) agreement during the African Union summit held in Nouakchott, Mauritania, from 25 June to 2 July.

The countries are now required to ratify the agreement through their parliaments.

Out of 54 African countries, 44 nations signed the AfCFTA on 21 March 2018, during the 10th African Union’s Extraordinary Summit in Rwanda, making Africa one of the largest economies in the world that could enhance its capacity to interact on equal terms with other international economic blocs.

Despite South Africa, one of Africa’s biggest economies with a gross domestic product (GDP) of US$341 billion, and countries like Egypt, Algeria, Angola, Morocco and Libya having now signed the AfCFTA, Nigeria - Africa’s biggest economy whose GDP is worth over US$594 billion - has yet to sign the agreement.

“While the signing can be hailed as a milestone in African integration, the impact is gradual. The real work lies ahead since tariffs are often not the main barrier to trade,” said the IPPR, adding that lack of tradable and complementary goods are among the real barriers to trade.

In the meantime, the Africa Investment Index released by Quantum Global Research in March 2018 saw Botswana taking the best performer ranking in Sub-Saharan Africa and fourth best overall in Africa, while South Africa and Zambia came in the sixth and eighth spot, respectively, among SADC countries.

The Africa Investment Index is compiled annually and is meant to paint a picture of the investment attractiveness of countries in the medium term, while seeking to provide a snapshot of the investment climate in the 54 countries in Africa, and give a ranking of these countries according to their attractiveness.

The index consists of six components – growth, liquidity, risk, business environment, demography and social capital and a total of 13 indicators.

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