Sub-Saharan Africa (SSA) economic outlook is increasingly strengthening. From 2.6% in 2017, the IMF forecasts a 3.4% growth in 2018. Besides recovery in commodity prices – Crude oil (+28.8%), Cocoa (+34.3%), Copper (+15.6%) and Gold (+2.7%) all up over the last 12 months, increasing political stability in South Africa and Kenya, following recent leadership changes, is positive for the region. Strong momentum in Nigeria and Ghana, also means a further improvement in regional growth.
To support fiscal spending, the SSA region has witnessed a spree of Eurobond issuances over the last 6 months. Nigeria took the lead, adding a total of $5.5bn Eurobond to its debt portfolio between Nov-17 and Feb-18. This spurred Kenya ($2.0bn), Ghana ($1.0bn), Cote d’Ivoire ($1.2bn) and Senegal ($2.2bn), which all approached the international debt market to take advantage of the low interest rate environment. Additionally, increased foreign loans are supporting external reserves position across the region, and consequently improving the currency market outlook.
Isolating the Angolan Kwanza, down 22.8% Ytd, due to policy and leadership changes, currency markets across SSA have appreciated 0.7% YTD (compared to -2.5% in 2017). All else unchanged, sustained improvement in commodity prices, policies, fiscal spending and exchange rate, are indications that GDP growth in the SSA region may outperform in 2018.