Economy
World Bank Predicts 1.6% Fall For African Economies
By Modupe Gbadeyanka
***Proposes Deeper Diversification, Better Policies
An analysis conducted by the World Bank has advocated for better economic policies and deeper diversification for African countries.
The World Bank noted in the report that countries of Sub-Saharan Africa present a diversified landscape of economic growth.
The bi-annual analysis of the state of African economies named Africa’s Pulse pointed out that while economic growth across the continent is projected to fall to 1.6% this year, the lowest level in over two decades, the GDP growth is showing resilience in about a quarter of countries.
Some of the best performers—Ethiopia, Rwanda, and Tanzania—have continued to post annual average growth rates of over 6%, and Côte d’Ivoire and Senegal have recently climbed into the ranks of top performing countries.
The weak aggregate economic performance is mainly a reflection of deteriorating economic performance in the continent’s largest economies: Nigeria and South Africa, which together account for half the region’s output.
In Nigeria, GDP contracted during the first two quarters of the year due to low oil revenues and a fall in manufacturing, among other things.
In South Africa, the economy contracted slightly in the first quarter, before rebounding in the second quarter, thanks to an increase in mining and manufacturing output.
Generally, oil exporters in Sub-Saharan Africa continue to experience slippages in economic growth due to shocks from the collapse of commodity prices. This underlines once more the limited diversification of their economies.
“Adjustment to low commodities has been limited in several commodity exporters, even as vulnerabilities have mounted,” says Punam Chuhan-Pole, World Bank Lead Economist for Africa. “Adjustment efforts should include measures to strengthen domestic resource mobilization, so as to reduce overdependence on resource-based revenues.”
A deeper analysis of economic growth patterns in the region shows that countries’ economies have performed differently in the years before and after the global financial crisis of 2008.
Some countries, those categorized as “established”, have sustained strong performance in both periods. Several other countries are seeing strong performance in recent years, and are categorized as “improved”.
Overall, these resilient groups of countries show more diversified export structures and have made more progress on structural reforms, business regulation, rule of law, and government effectiveness. Outlook Against this backdrop, a modest rebound is forecast for Sub-Saharan Africa in 2017.
Economic activity is expected to rise to 2.9%. The uneven growth performance we currently see should continue, with the region’s largest economies and other commodity exporters experiencing modest growth, as commodity prices strengthen slowly, while other countries continue to expand at a robust pace, supported in part by infrastructure investments.
Looking ahead, increasing agricultural productivity on the continent is central to transforming Sub-Saharan Africa. Analysis shows that addressing the quality of spending and the efficiency of resource use is even more critical than addressing the level of agriculture spending.
Rebalancing the composition of public agricultural spending could reap massive payoffs. The Report’s Key MessagesAfter slowing to 3% in 2015, economic growth in Sub-Saharan Africa is projected to fall to 1.6%in 2016, the lowest level in over two decades.
The sharp decline in aggregate growth reflects the challenging economic conditions in the region’s largest economies and commodity exporters as they continue to face headwinds from low commodity prices, tight financing conditions, and domestic policy uncertainties.
At the same time, in about a quarter of countries, economic growth is showing signs of resilience. Some countries—Ethiopia, Rwanda, and Tanzania—have continued to post annual average growth rates of over 6%, exceeding the top tercile of the regional distribution; and several other countries—including Côte d’Ivoire and Senegal—have moved into the top tercile of performers.
Risks to the outlook remain tilted to the downside. On the external front, old risks remain salient and include slower improvements in commodity prices, tighter global financial conditions, and security concerns.
Post-global financial crisis performance in the region as a whole has not been as stellar as it was pre-crisis.
However, there are some diverging growth experiences across countries.
Increasing agricultural productivity is central to transforming Sub-Saharan African economies. Addressing the quality of public spending and the efficiency of resource use is even more critical than addressing the level of spending.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange dropped for the third consecutive session on Wednesday, March 18, by 0.39 per cent due to continued sell-offs.
In what would be the final trading session of the week due to public holidays on Thursday and Friday for Eid-el-Fitr, the NASD Unlisted Security Index (NSI) further dipped by 16.14 points to 4,114.75 points from 4,130.89 points, and the market capitalisation lost N9.66 billion to close at N2.461 trillion versus the previous day’s N2.471 trillion.
FrieslandCampina Wamco Nigeria Plc depreciated by N10.32 to sell at N112.00 per share versus N122.32 per share, NASD Plc dropped N4.50 to finish at N41.50 per unit compared with the previous session’s N46.00 per unit, and Geo-Fluids decreased by 9 Kobo to N3.02 per share from N3.11 per share.
On the flip side, Air Liquide Plc improved by N2.23 to N24.57 per unit from N22.34 per unit, Central Securities Clearing System (CSCS) Plc advanced by 90 Kobo to N76.33 per share from N75.43 per share, Food Concepts Plc rose by 24 Kobo to N3.30 per unit from N3.06 per unit, UBN Property Plc surged by 20 Kobo to N2.18 per share from N1.98 per share, Impresit Bakalori Plc jumped 16 Kobo to N1.83 per unit from N1.67 per unit, and First Trust Mortgage Bank Plc added 14 Kobo to trade at N1.89 per share versus N1.75 per share.
During the trading day, the volume of securities went up by 43,404.4 per cent to 400.8 million units from 921,265 units, the value of securities grew by 2,108.7 per cent to N1.2 billion from N54.7 million, and the number of deals soared by 23.7 per cent to 47 deals from 38 deals.
CSCS Plc ended the day as the most traded stock by value (year-to-date) with 38.7 million units valued at N2.4 billion, followed by Infrastructure Guarantee Credit Plc with 400 million units exchanged for N1.2 billion, and Okitipupa Plc with 6.4 million units traded for N1.2 billion.
Resourcery Plc finished the session as the most traded stock by volume (year-to-date) with 1.1 billion units worth N415.7 million, trailed by Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion, and Geo-Fluids Plc with 131.1 million units valued at N505.6 million.
By Dipo Olowookere
The Nigerian Exchange (NGX) experienced a pullback of 0.69 per cent as a result of profit-taking by investors, with shares in the banking and energy sectors mostly affected.
Data harvested by Business Post showed that the energy index was down by 4.58 per cent during the session, and the banking space lost 2.14 per cent.
They brought down the All-Share Index (ASI) by 1,402.56 points to 201,156.85 points from 202,559.41 points and shrank the market capitalisation by N900 billion to N129.126 trillion from N130.026 trillion.
Customs Street ended in red at midweek despite three of the five key sectors finishing in green. The consumer goods counter expanded by 1.19 per cent, the industrial goods index improved by 0.46 per cent, and the insurance sector grew by 0.43 per cent.
Red Star Express declined by 9.98 per cent to N25.70, Aradel Holdings went down by 9.68 per cent to N1,210.30, Presco lost 9.30 per cent to trade at N1,701.10, Living Trust Mortgage Bank crashed by 8.40 per cent to N4.80, and DAAR Communications dropped 7.50 per cent to end at N1.85.
On the flip side, Secure Electronic Technology gained 10.00 per cent to settle at N1.32, Guinness Nigeria rose by 9.92 per cent to N423.20, John Holt increased by 9.72 per cent to N11.85, Sovereign Trust Insurance surged by 9.57 per cent to N2.06, and Linkage Assurance chalked up 9.33 per cent to trade at N1.64.
Investor sentiment was weak yesterday after the bourse registered 33 price gainers and 38 price losers, indicating a negative market breadth index.
Market participants bought and sold 6.1 billion stocks valued at N130.1 billion in 58,562 deals compared with the 1.8 billion stocks worth N88.1 billion traded in 62,654 deals on Tuesday, representing a shortfall in the number of deals by 6.53 per cent, and a spike in the trading volume and value by 238.89 per cent and 47.67 per cent apiece.
The most active equity on Wednesday was eTranzact with 5.2 billion units sold for N24.3 billion, Wema Bank exchanged 111.4 million units worth N3.1 billion, Coronation Insurance transacted 96.4 million units valued at N303.9 million, Dangote Cement traded 75.2 million units for N56.5 billion, and Access Holdings exchanged 61.5 million units valued at N1.6 billion.
By Adedapo Adesanya
The Naira stumbled against the Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, March 18, by N8.96 or 0.67 per cent to trade at N1,353.00/$1, in contrast to the previous day’s rate of N1,344.04/$1.
Also, the local currency weakened against the Pound Sterling in the spot market at midweek by N6.06 to sell for N1,801.93/£1 compared with Tuesday’s value of N1,795.87/£1, and lost N4.75 against the Euro to quote at N1,556.22/€1 versus the preceding day’s N1,551.46/€1.
However, the Nigerian currency gained N2 against the greenback yesterday at the GTBank forex desk to close at N1,363/$1 versus the N1,365/$1 it was exchanged for a day earlier, and traded flat in the parallel market at N1,395/$1.
Nigeria’s external reserves fell by $178 million over three consecutive international payments recorded by the Central Bank of Nigeria (CBN), settling at $49.83 billion from $50.008 billion, indicating that there have been some interventions in the FX market for stability and liquidity.
While the wider outlook for the Naira is positive, potential disruptions to global oil supply have increased volatility in energy markets and could spike inflation with higher oil prices.
In the cryptocurrency market, Bitcoin (BTC) slipped below $71,000 on Wednesday as Federal Reserve Chair Jerome Powell flagged rising oil prices amid the war in Iran as a new inflation risk. It sold at $70,538.58.
The US central bank held interest rates steady as expected, but during his post-meeting press conference, Mr Powell acknowledged that the recent surge in energy prices is already feeding into the central bank’s outlook.
He said rising oil prices “for sure showed up” in policymakers’ higher inflation outlook for this year, lifting their forecast to 2.7 per cent from 2.4 per cent.
Further, Ethereum (ETH) lost 6.3 per cent to trade at $2,178.56, Cardano (ADA) fell by 6.1 per cent to $0.2714, Dogecoin (DOGE) dropped 5.7 per cent to close at $0.0096, Solana (SOL) dipped 4.8 per cent to $89.83, Ripple (XRP) slumped by 3.8 per cent to $1.46, and Binance Coin (BNB) declined by 3.7 per cent to $648.61.
However, TRON (TRX) appreciated by 0.4 per cent to $0.3037, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.
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