Sub-Saharan Africa Archives - African Financial & Economic Data

07 Mar

Tillerson Heads to Africa With Security, Not Aid, as U.S. Focus

Secretary of State Rex Tillerson begins his first official trip to sub-Saharan Africa with a pledge to help shore up trade, civic freedom and good governance in countries that President Donald Trump has harshly criticized.

U.S. budgetary priorities tell a different story. Tillerson heads to the continent with the Trump administration advocating cuts of more than a third in aid to African countries and programs, along with deep reductions to global health initiatives.

With several U.S. allies struggling to rein in Islamist extremist groups, and China increasingly making inroads on the continent, the U.S. security relationship will be the focus.

While the top U.S. diplomat has a broad itinerary on his five-nation trip, Africa experts say Tillerson’s planned stops in Ethiopia, Djibouti, Kenya, Chad and Nigeria underscore the emphasis on security — and away from the traditional U.S. role as advocate and partner for good governance and development.

“The common thread among them all is a security partnership,” said Jennifer Cooke, director of the Africa program at the Center for Strategic and International Studies. “The substance of what he conveys may be more diverse, but given the signals coming out of the White House and administration to date, I imagine that security is top of the order, along with cementing relationships with partners that the U.S. considers important security players.”

While Tillerson announced $533 million in new aid to fight famine and food insecurity on the continent in a speech Tuesday before his departure, State Department officials have downplayed the possibility of big announcements or new initiatives during the trip.

Adding to a sense of drift, U.S. exports to Africa in 2017 hit their lowest since 2006, according to U.S. Census Bureau figures, while senior State Department posts for the continent remain unstaffed.

To read the full article, click here.

15 Dec

Africa Needs a Commodity-Price Surge to Avert Debt Crunch

Sub-Saharan Africa faces a potential debt crunch unless commodity prices improve and boost the pace of economic growth.

06 Nov

Senegal – another big rebasing to GDP

We think Senegal is one of the good news stories in sub-Saharan Africa, which will be reinforced as GDP is revised up by perhaps 30% in 2018.

Senegal was one of only two sub-Saharan African countries to be upgraded in 2017

Senegal is the only sub-Saharan African country we follow to get upgraded in 2017, from B1 to Ba3 by Moody’s in April. This put it one notch above the B+ S&P rating which is unchanged since 2000. In the rest of sub-Saharan Africa over 2017, only Burkina Faso received an upgrade from B- to B; it is also in the West Africa Economic and Monetary Union (WAEMU).

There are IMF programmes with virtually every one of the WAEMU member states, which may be helping this positive trend. We have assumed no further change in Senegal’s ratings, but after this week’s visit to Dakar, we see upside risk to ratings in 2018-2019.

GDP to be revised up, perhaps by 30%, improving most ratios significantly

The most likely trigger is the GDP rebasing that should arrive in 2018, which could lift GDP by around 30%. While not as dramatic as this decade’s 60% GDP hike in Ghana or the nearly 100% rise in Nigeria, it will make a significant difference to Senegal’s ratios.

We expect the public debt ratio to drop from 61% of GDP in 2017 to perhaps 46% of GDP in 2018. Gross external debt may fall from around 55-62% of GDP in 2016-2017 to 39% of GDP in 2018-2019, even assuming new eurobond issuance. The current account (C/A) deficit may shrink from the IMF forecast of 5-6% of GDP in 2018-2019 to 4% of GDP and the budget deficit from 3% of GDP to 2%. The only negatives we see are indicators such as exports to GDP (which will fall) or government fiscal revenues to GDP; the latter may fall from a relatively good figure of 20% of GDP now to around 16% of GDP (still better than many in sub-Saharan Africa).

This comes against a strong backdrop of government-led infrastructure spending growth

Senegal already looks pretty good to us (and Moody’s evidently) due to strong 6-7% GDP growth in 2015-2017, a one-third reduction in the budget deficit ratio from 5-6% of GDP in 2011-2015 to 3-4% of GDP in 2017, and a halving of the C/A deficit from 10-11% of GDP in 2012-2013 to 5% of GDP in 2017. We think the WAEMU currency is working for Senegal, with that currency within 1% of its long-term average value (XOF562/US$) based on our real effective exchange rate (REER) model that extends back to 1995. It has been around fair value 70% of the time since 1995, so stability is normal, and we assume will be maintained.

29 Aug

How a new cruise ship terminal could boost Durban’s economy

While sub-Saharan Africa is on the map for foreign investors in many other sectors, the cruise ship industry mostly passes the region by. It is hoped that this situation could change once the new Durban Cruise Terminal opens for business.

According to Andrew Pike – head of the ports, terminals and logistics division at law firm Bowmans – the facility, expected to be completed in 2019, could be just what the African cruise industry needs. He heads the Bowmans team advising KwaZulu Cruise Terminal (KCT), the preferred bidder for the tender to develop and operate the project.

How we made it in Africa asked Pike about the expected economic impact of the terminal and opportunities to grow the regional cruise industry.

MSC Cruises SA, part of one of the world’s largest passenger liner operators, is a joint-venture partner of KCT, the entity that will build and operate the new Durban Cruise Terminal. However, MSC already operates a number of cruises from Durban, which raises the question whether the terminal will give preference to MSC, or if it will accommodate all operators equally?

No, the terminal concession will be offered on a common-user basis, meaning that the terminal operator, KCT, will be obliged to give reasonable equality of access to any cruise liner wishing to use the terminal. Accordingly, there can be no positive discrimination towards MSC Cruises ships.

Is the rationale behind the new terminal to: 1) Entice operators to develop entire new cruises that stop at Durban; 2) Motivate those currently passing Durban to dock at the city; or 3) To give passengers of liners already stopping at Durban an improved experience?

Ideally, and as far as possible, all three, but the principal motivation at present is to improve the experience for passengers already passing through the existing terminal at N-Shed. The existing terminal is not a world-class facility and the new terminal will give them a far better experience. This in turn will hopefully drive other cruise operators to call in Durban on an ad hoc basis or even to schedule new cruises to Durban because of their confidence that they will be received in a world-class facility. So the bigger picture is to increase tourism to Durban.

Is one modern cruise terminal enough to lure operators to the southern tip of Africa? Don’t you need facilities such as these all along the coast of the continent?

One may be insufficient, but it provides an anchor for cruises on the African coast. Once there is one modern terminal in southern Africa which is successful, it may well prompt other cruise operators to develop similar, or at least complementary, facilities in other jurisdictions such as Mozambique, Tanzaniaand Kenya.

How will the new cruise terminal impact Durban’s economy?

In the short term there will be some employment creation during the construction phase. In the longer term there will be further employment and tourism benefits as the new terminal will have a retail component and will also link through to the Point precinct, meaning that the terminal plus all of the other facilities in the area become an attraction for tourists and boost local businesses.

One would also hope that the whole package will result in increased passenger throughput and consequently provide opportunities for tour operators into the greater Durban and KwaZulu-Natal province, such as Valley of a Thousand Hills tours, eco-safaris to small reserves in the area, and of course increased pedestrian traffic through markets such as Wilson’s Wharf, Victoria Street Market and the like.

Overall, the facility will put Durban more on the map for foreigners who know nothing about the city. CNN once described Durban as “The coolest city you’ve never seen”. The new terminal will get Durban seen and, whether foreigners pass through the terminal or not, word of mouth from those terminal passengers will provide a strong boost for Durban tourism.

from How We Made It In Africa

02 Aug

Mobile contributes $110bn to sub-Saharan economies

Sub-Saharan Africa is, and will continue to be, the fastest growing mobile market in the world, contributing $110bn to Sub-Saharan economy

By the end of the decade, there will be more than half a billion mobile subscribers in the region, up from 420 million at the end of 2016.

Among the growth drivers is the under-16 age group, which accounts for more than 40 percent of the population in many countries, and women, who are currently 17 percent less likely to have a mobile phone subscription than their male counterparts.

Mobile is now also a significant contributor to the sub-Saharan African economy. In 2016, mobile technologies and services generated $110bn of economic value, equivalent to 7.7 percent of regional GDP.

This figure is expected to grow to $142bn, or 8.6 percent of GDP, by 2020. The mobile ecosystem also employed about 3.5 million in the region last year, and contributed $13bn to the public sector through taxes.

Here are some of the key trends industry group GSMA has observed:

Transforming industries

Across Africa, mobile is transforming traditional industries and enabling innovative business models to deliver affordable and sustainable services.

Perhaps one of the best examples is mobile money, which has been critical in advancing financial inclusion over the last decade. There are now 140 live mobile money services in 39 countries in sub-Saharan Africa, accounting for nearly 280 million registered accounts.

Today, more than 40 percent of the adult population in seven countries – Gabon, Ghana, Kenya, Namibia, Tanzania, Uganda and Zimbabwe – use mobile money regularly.

Utilities are another area where mobile is driving innovation. Mobile-based, pay-as-you-go solar enables access to clean energy solutions, with entrepreneurs partnering with mobile operators to deliver the solution.

Growing by nearly 40,000 systems per month, there are now one million home systems installed globally. Some 95 per cent are in sub-Saharan Africa, impacting about 4.8 million people.

We see similar innovation in sectors such as healthcare, agriculture and others. This is just the beginning as we move forward in Africa’s digital age.

Fuelling economies

Local mobile operators have invested $37bn in their networks over the past five years, mainly to deploy new 3G/4G mobile broadband networks across the region.

Fuelled by growing access to mobile data services and smart devices, the local mobile ecosystem is flourishing, supported by investments from operators and others in mobile-focused start-ups and tech hubs.

Seventy-seven tech start-ups across the region raised almost $370m in funding in 2016, up 33 percent from the previous year.

However, this continued growth and investment is not a given. The mobile industry faces several challenges, such as high levels of taxation and outdated regulatory frameworks.

Positive collaboration is needed between governments and the mobile industry to enable innovation and extend connectivity to all.

Connecting everyone

Looking beyond the numbers, mobile is positively impacting African society and helping to achieve the UN Sustainable Development Goals (SDGs) in time for the 2030 deadline.

Mobile operators across Africa are working together to deploy mobile-enabled solutions to deliver key services such as health and education, increase women’s access to mobile, create employment opportunities and decrease poverty.

Of course, the mobile industry cannot solve the challenges of the SDGs alone – no one can. Governments, industry, humanitarian organisations and individuals must come together to build sustainable partnerships.

Having just visited Tanzania and witnessed much of this first-hand, I am struck again by the power of mobile to foster innovation, to fuel economies and to transform lives across Africa.

[Via thisisafricaonline]

16 Jan

Clarity on Growth Rates of South Africa and Sub-Saharan Africa

Growth in Sub-Saharan Africa is estimated to have slowed to 1.4 percent in 2016 from 3.4 per cent in 2015

PRETORIA, South Africa, January 16, 2017

The Presidency has received a number of inquiries about the reference to an economic growth rate of 2.9 percent in the January 8 anniversary statement of the governing party, the ANC.

The 2.9 percent mentioned in the statement is the growth rate for Sub-Saharan Africa.

For 2017 growth in the region is more optimistically projected to rise to 2.9 per cent

Growth in Sub-Saharan Africa is estimated to have slowed to 1.4 percent in 2016 from 3.4 per cent in 2015. For 2017 growth in the region is more optimistically projected to rise to 2.9 per cent.

In the Medium Term Budget Policy Statement, or mini-Budget issued in October last year, the South African government indicated that South Africa is expected to grow at 0.5 per cent in 2016, rising to 1.3 per cent in 2017.

This remains government’s official forecast.

Government will provide further updates on the growth estimates during the 2017 Budget presentation in February.

Tag Archives: Sub-Saharan Africa