Southern Times Writer
Southern Africa is currently the slowest-growing region in Africa, with its Gross Domestic Product growth forecast at 1.8 percent, according to an economic update released this week by the Institute of Chartered Accountants Worldwide (ICAW).
The slowdown in the growth rate has been primarily attributed to the under-performance of the South African economy, which is the domineering economy in the region.
Slow growth in Angola, the region’s second-biggest economy, has also been a further obstacle to the region’s growth, hence the mixed inflation performance during the month of May may have been influenced by these two countries.
The SADC region experienced mixed performance of the inflation rate in May as a result of the slow economic performance in the major economies, South Africa and Angola.
Countries which encountered a rise in inflation in May include Zimbabwe, Zambia, Botswana and South Africa. The annual inflation rate in Zimbabwe jumped to 97.85 percent in May, from 75.86 percent in the previous month. The rise has been as a result of a general rise in prices, in particular fuel prices which were raised near 50 percent during the month.
Headline inflation has been on an upward trend since last October, as Zimbabweans face shortages of food, fuel and foreign currency. Monthly, consumer prices soared 12.5 percent, up from 5.5 percent gain in the prior month.
South Africa’s annual inflation rate rose to 4.5 percent in May 2019 from 4.4 percent in the prior month, above market expectations of 4.4 percent, but still in the mid-point of the Reserve Bank's target range of 3.6 percent. The main upward pressure came from prices of housing and utilities and food while those of transport slowed.
“Rolling blackouts had the economy reeling at the outset of the year. Output fell sharply quarter-on-quarter in Q1 2019 as power cuts, coined ‘load-shedding’ by state-owned Eskom, levelled economic sentiment. Spending and investment each tumbled; the former amid an uptick in unemployment, while the latter on deterred non-residential outlays,” stated Focus Economics.
The annual inflation rate in Zambia climbed to 8.1 percent in May 2019 from 7.7 percent in the prior month. Prices rose mostly for food and non-alcoholic products (9.1percent vs 8.3percent in April), namely vegetables meat and fish products.
Additional upward pressure came from transport (14.5 percent, the same pace as in April); housing and utilities (6% vs 5.8%); furnishings (5.3% vs 5.1 percent); clothing & footwear (6.4 percent vs 6.2percent); miscellaneous goods and services (6.7percent vs 6.6 percent); recreation and culture (4.6 percent vs 3.7 percent) and restaurants and hotels (6.6 percent, the same pace as in April).
On a monthly basis, consumer prices went up 0.9 percent after increasing 0.7 percent in the prior month.
Botswana also witnessed a rise to 2.6 percent in May 2019 from 2.5 percent in the prior month. Prices increased faster mainly for transport (7.7 percent vs 7.6 percent in April) and food and non-alcoholic beverages (1 percent vs 0.4 percent). At the same time, inflation was steady for housing and utilities (at 1.7 percent); furnishings (at 1.6 percent) and restaurants and hotels (at 2.5 percent).
On the other hand, the SADC region saw a drop in the annual inflation rates of Malawi, Namibia, Mozambique and Angola. The annual inflation rate in Malawi dropped to 8.9 percent in May 2019 from 9.1 percent in the previous month.
The annual inflation rate in Namibia fell to 4.1 percent in May 2019 from 4.5 percent in the previous month, hitting its lowest level since May last year. Prices slowed mostly for housing and utilities (1.9 percent vs 2.2 percent in April); food and non-alcoholic beverages (4.4 percent vs 5.3 percent); alcoholic beverages and tobacco (5.5 percent vs 7.5 percent) and hotels, cafes and restaurants (4.7 percent vs 5.3 percent).
Meantime, inflation was steady for furnishings (at 1 percent); recreation and culture (at 4.5percent) and miscellaneous goods and services (at 2.2percent). In contrast, cost advanced further for transport (7.6 percent vs 7.1 percent) and remained elevated for education (12 percent).
Mozambique’s inflation rate fell to 2.4 percent in May 2019 from 3.3 percent in the prior month. Prices rose at a slower pace mainly for food and non-alcoholic beverages (2.5 percent vs 3 percent in April); transport (1.6 percent vs 5.1 percent); restaurants and hotels (3.6 percent vs 3.7 percent) and housing and utilities (2.9 percent vs 4.2 percent). I
In Angola, the annual inflation rate dropped further to 17.14 percent in May 2019 from 17.36 percent in the prior month. According to Trading Economics, headline inflation decreased for the fifth straight month to its lowest level since January 2016.
A number of economic initiatives have been introduced in Angola, including the support by the IMF which may have a bearing on the enhancement of the economy.
“Oil production tumbled through May and exports likely lost further momentum in the second half of Q2 amid a major global oil price downturn. Nevertheless, non-oil sector metrics appear more upbeat. Moderating inflation, lower interest rates and political stability boded well for private consumption and investment activity in January-May.
“Meanwhile, on 6 June the parliament approved the downwardly revised state budget for 2019 reflecting a weaker than expected oil price outlook. On 12 June, the IMF completed the First Review of Angola’s economic programme, unlocking an additional US$248 million of financing and bringing total disbursements under the arrangement to USD 1.2 billion,” said Focus Economics.
Namibia, Germany sign R1.3 billion agreement
Southern Times Writer
Windhoek - Namibia and German last week signed the second cooperation pact for the implementation of the R1.3 billion financing agreement catering for three key sectors of water, infrastructure and transport.
The funding of the projects will be funded by the Kreditanstalt für Wiederaufbau (KfW), a German Development Bank and is in line with driving Namibia’s National Development Plans.
Speaking at the signing ceremony, Namibian Minister of Finance, Calle Schlettwein, and the outgoing German Ambassador to Namibia Christian Schlaga described the sign off as a commitment by the two countries to work on the implementation of development projects.
Schlettwein also said "the bilateral agreement for financial cooperation covers priority areas of national development plan".
Schlettwein said German, which formerly colonised Namibia, remains a key development partner for the Southern African country.
The Namibian minister also added that the agreement provides for targeted financial cooperation to finance development projects in the priority areas of national developmental, consistent with Namibia’s National Development Plan.
He said the cooperation for the two countries reflects the outcome of the government-to-government negotiations and provides for preferential loans for potable water supply and support programme for national road maintenance and rehabilitation.
“Notably, the funding for secure water supply is especially important,
given the current pressing needs which are exacerbated by the prevailing drought national disaster. The agreement shall enable the Government of the Republic of Namibia or another borrower determined jointly by the two governments to obtain preferential financing from KfW for projects to support the national development agenda as set out in our key focus areas,” he said.
Schlaga said the agreement was a symbol that Germany was key in driving national development plans for Namibia.
He added that the partnership would see Namibia being offered loans in a favourable currency, including the South African rand as well as the Namibian dollar.
“About R320 million will be provided for the completion of phase 2 of the Swakopmund to Walvis Bay road. The completion of this road will give full functionality to the freeway, especially in view of the realisation of the Walvis Bay Port. This will help in relieving heavy traffic that is bound to the inland destinations as well as to countries on the Namibian northern borders,” Schlaga.
Key among the water projects is the upgrading of water infrastructure for Windhoek which is currently facing erratic water supply because of ageing equipment as well poor rainfall as a result of the current drought.