Recovery in Sub-Saharan Africa (SSA) remained weak in 2018 amid sluggish growth in Nigeria, South Africa, and Angola – the three largest economies in the region.
Looking ahead, the IMF projects growth in the region to rise to 3.3% in 2019, reflecting a rebound in oil production in Nigeria and Angola, but a heavy reliance on oil leaves both economies exposed to external shocks. Economic activity in South Africa is expected to remain subdued, as high unemployment and slow credit growth weigh on household demand, and fiscal consolidation limits government spending.
Additionally, uncertainties around land expropriation without compensation policy may drag the South African economy further.
Notably, about half of all the countries in Africa are scheduled for one election or the other in 2019. This may weigh on foreign investment in these countries, especially as the perceived political risk heightens. Nonetheless, the implementation of the Africa Continental Free Trade Area (AfCFTA), on further ratification by individual member countries, portends a positive outlook for the overall region in 2019. If ratified, the agreement is expected to result in the largest free-trade area in terms of participating countries since the formation of the World Trade Organization.
UNITED CAPITAL RESEARCH