Africa sliding?

14th October 2016 By: Terence Creamer - Creamer Media Editor

Africa sliding?

Over the past number of years, the Africa Rising narrative has asserted itself. It has been a story of improving economic growth, rising investment and greater democracy. Between 2003 and 2008, sub-Saharan Africa (SSA) enjoyed an average yearly growth of 6.8% and was home to many of the fastest-growing countries in the world.

However, the rising narrative coincided with a powerful exogenous force, which disguised many of the region’s chronic shortcomings: the commodities super cycle. The subsequent resources slump has shown up many of these weaknesses and has arguably also separated the genuine risers from the sliders.

In its October Africa’s Pulse publication, the World Bank placed the various countries of SSA into four distinct categories: ‘established’ performers; ‘improved’ performers; countries that are ‘slipping’; and those ‘falling behind’.

It will come as little surprise to most South Africans that this country has been lumped with ten other African countries that the bank considers to be slipping.

Unsurprising, too, is the fact that Nigeria, which is in recession, has been included in this unhappy club. As Africa’s largest oil exporter, Nigeria has been especially hurt by the precipitous fall in oil prices, with the country’s gross domestic product (GDP) contracting by 2.1% year-on- year in the second quarter, following a 0.4% contraction in the first.

The other slippers are identified as Angola, Botswana, Cape Verde, Chad, Equatorial Guinea, The Gambia, Liberia, Madagascar and Sierra Leone.

Given that Nigeria and South Africa account for 50% of the region’s output, the two countries are major contributors to the decision by the bank to downgrade SSA’s growth outlook for the 2016 from 3% to only 1.6%. This is the lowest level in over two decades and is attributed to low commodity prices, tight financial conditions, policy uncertainty and droughts, as well as political and security concerns, which continued to weigh on activity across the region.

Worryingly, at 1.6%, growth has fallen below the 2.7% rate of population expansion in the region, which means that income per head will retreat for the first time in years. In addition, the 2.9% forecast for 2017 and the 3.6% for 2018 are well below the most recent growth trends.

That said, the slipping storyline is not the only one for the region – there are still a number of African countries that continue to perform, despite the headwinds. In fact, over a quarter of the region’s countries – which are home to 41% of SSA’s people and which produce 21% of its output – have been grouped as either ‘established’ or ‘improved’ performers.

The group of established growth performers consists of Ethiopia, Mali, Mozambique, Rwanda and Tanzania, where average GDP growth was 6.8% from 1995 to 2008 and 7.8% in the period 2014 to 2016. The best performer between 1995 and 2008 was Rwanda, at 10.9% a year, while Ethiopia has performed best in the subsequent period, with an average yearly growth of 9.4%. Mozambique continues to be included, despite the fact that its growth is expected to fall 3.6% in 2016. This is because its average yearly growth for 2014 to 2016 is still 5.9%.

The group of improved performers, meanwhile, includes Benin, Cameroon, Côte d’Ivoire, the Democratic Republic of Congo (DRC), Kenya, Senegal and Togo. This group’s average growth rate increased from 2.9% in the period 1995 to 2008 to 5.8% in more recent years from 2014 to 2016. However, political tensions in the DRC are likely to result in a deceleration.