14 •
The Lion King
• October - December 2016
O
ver the last couple of years,
Africa’s growth has slowed
significantly largely due to
challenging economic conditions
being experienced in the region’s
largest economies and commodity
exporters, Nigeria, Angola and South
Africa, as they continue to face
economic headwinds from lower
commodity prices, weaker investor
confidence, droughts, and policy
uncertainty. However, the smaller
economies, Ethiopia (GDP 10.5%)
Rwanda (GDP 6.5%), Tanzania (GDP
7%) and Democratic Republic of
Congo (GDP 6.9%), continue to show
signs of resilience.
Despite the foregoing, 2017 is poised
to become a promising year for
Africa if the continent is able to wade
through the aftermath of some of
the biggest economic impacting
events of 2016 – UK Brexit and the US
Presidential Election Vote outcomes,
whilst taking advantage of other key
areas of economic advantage:
Brexit:
In June 2016, Britons stunned
the world by voting to leave the
European Union. Although the full
consequence of this dramatic
decision is still subject to open debate,
some negative implications may await
the African continent with regard
to trade as certain international
trade agreements may need to be
re-negotiated. Also the UK has been
a substantial contributor to the EU aid
programme, providing some €2billion,
including 14.8% of the European
Development Fund. If the UK goes
ahead to trigger Brexit negotiations,
this may have adverse effects on the
African countries that have benefitted
directly or indirectly from this Fund.
Finally, with the rapid collapsing of the
pound following the vote outcome,
remittances to Africa have become
more expensive.
US Vote outcome:
The world received
another stunner in November when
contrary to popular expectations, the
Republican candidate Businessman
Donald Trump, defeated the
Democratic Party candidate, former
Secretary of State Hillary Clinton in the
US Presidential Elections. Although the
consequences of a Trump presidency
for Africa remain uncertain, it should
be duly noted that some of his
broad policy ideologies that have
emerged include trade protectionism,
fiscal austerity and anti-immigration,
amongst others.
From an investment perspective, lower
rates for longer in the US could benefit
African markets with higher yields on
offer. This is subject to other issues such
as policy instability and insecurity being
addressed. Furthermore, domestic
challenges and policy reforms will
play a defining role in relation to how
sensitive African currencies are to US
political developments in 2017.
Empowerment of the millennials:
According to a newWorld Bank report,
the population in Africa is rapidly
expanding, and by 2060 the region will
hold an estimated 2.8 billion people.
With the right policies and actions,
countries in Sub-Saharan Africa can
reap a tremendous demographic
dividend from this growth to propel an
economic take-off. Coupled with the
rapid adaptation of the millennials to
technological trends, we expect there
AFRICA SET TO
BLAZE THE TRAIL OF
GROWTH IN 2017
By Olawale Hamed
Cover
2017 is poised to
become a promising
year for Africa if the
continent is able
to wade through
the aftermath of
some of the biggest
economic impacting
events of 2016”
