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 OPEC Fund for International Development has pledged to provide more than $1 billion in funding to Africa and developing countries elsewhere as part of a broader $2 billion pledge by Arab nations over the next five years.
The fund, founded by the Organisation of the Petroleum Exporting Countries (OPEC) to fund projects in non-OPEC member states, also laid out a new trade finance initiative to help countries secure imports and liquidity during periods of turmoil.
It comes as the United States and a number of European countries reduce the amount of bilateral aid they provide to poorer countries around the world.
The Vienna-based OPEC Fund announced on Wednesday around $720 million in new financing to support development efforts across Africa, Asia, Latin America and the Caribbean, and the signing of $362 million in new loan agreements.
The agreements included a $300 million plan for Rwanda over the next three years as well as programmes worth $65 million and $40 million, respectively, in Ivory Coast and for the Uganda-based East African Development Bank.
The OPEC Fund also announced a new Trade Finance Initiative to boost trade resilience in partner countries by facilitating access to essential imports, closing liquidity gaps, and strengthening resilience to external shocks in vulnerable economies.
There was also a cooperation agreement with the Central American Bank for Economic Integration for infrastructure, energy and human development projects and the formalisation of a tie up with the Islamic Organization for Food Security on climate-resilient agriculture.
The OPEC Fund hosted the annual meeting of the heads of institutions of the Arab Coordination Group (ACG) this week.
The roundtable resulted in an ACG joint pledge of $2 billion financing over the next five years. A dedicated Arab Donors Roundtable on the Sahel also discussed greater support for the region’s urgent challenges such as drought.
The OPEC Fund also disclosed that a cooperation agreement with the International Anti-Corruption Academy (IACA) will support training programs to promote institutional transparency and anti-corruption capacity building in partner countries.
By Dipo Olowookere
A subsidiary of United Capital, United Capital Asset Management West Africa Limited (UCAMWAL), has finally commenced operations, introducing two new mutual funds targeted at investors throughout Francophone West Africa.
The new firm, headquartered in Cote d’Ivoire, will deliver sophisticated yet accessible wealth management solutions to residents of the region, especially in Benin Republic, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.
United Capital recently made an in-road to the French-speaking country as part of its strategic pan-African expansion. It obtained a license from the Financial Markets Authority of the West African Economic and Monetary Union (AMF-UMOA).
Business Post reports that UCAMWAL has launched two CFA franc-denominated mutual funds known as the UCAMWAL Bond Fund and the UCAMWAL Diversified Fund.
These products have been carefully designed to meet the diverse needs of both individual and institutional investors, offering tailored support to long-term wealth creation while addressing varying risk appetites.
The UCAMWAL Bond Fund is a low-risk, open-ended fund that focuses on fixed-income and money market instruments, making it ideal for steady capital preservation and long-term wealth building, while the UCAMWAL Diversified Fund offers moderate risk exposure through a balanced mix of fixed income, money market assets, and equities – perfect for investors seeking both growth and income diversification.
“These funds are tailored to meet the distinct needs of our investors, blending global standards with local market insight. We recognize that every investor’s journey is unique, which is why our solutions are built to support diverse goals across different life and business stages,” the Managing Director of UCAMWAL, Labas Bamba, explained.
“This product launch signals the kick-off of the expansion of our pan-African footprint, starting with the WAEMU region. We are here to make a difference, and we are bringing our proven investment expertise into this market, to support cross-border investment, and support Africa-driven prosperity,” the chief executive of United Capital, Mr Peter Ashade, said.
The Director for Africa Operations at United Capital, Mr Ejikeme Okoli, said, “Our strategy is not exploitative but collaborative, and will harness local insights to create shared value. We aim to deliver tailored financial solutions, manage risk effectively, and drive inclusive growth across the region.”
By Adedapo Adesanya
The Governors of the 36 states of Nigeria have agreed to dismantle multiple taxes across the country in line with the tax bills awaiting assent by President Bola Tinubu.
They made the resolution after a meeting of the Nigeria Governors’ Forum (NGF) in Abuja which ended early Thursday, adding that they will also eliminate illegal road blocks under their jurisdiction as part of efforts to facilitate easy movement of goods.
The Governor of Lagos State, Mr Babajide Sanwo-Olu, who read the communique at the end of the meeting, said the governors resolved to dismantle illegal road blocks and multiple taxes which they agreed were responsible for food inflation in the country.
The communique was signed by NGF Chairman and Governor of Kwara State, Mr AbdulRahman AbdulRazaq.
“The forum received a briefing from the National Security Adviser (NSA), accompanied by the Ministers of Defence, Agriculture, Livestock Development, and Transportation, on the rising cost of food and livestock transportation across the country.
“The presentation revealed that the proliferation of checkpoints, illegal taxation, and poor infrastructure are key contributors to price inflation and inefficiencies in the food supply chain.
“The NSA noted that a high-level inter-ministerial committee has been established to address these concerns and has submitted its recommendations for the endorsement of the Forum.
“Governors acknowledged the urgency of the matter and expressed commitment to collaborate with federal authorities to streamline levies, dismantle unauthorized checkpoints, and improve the movement of goods across states,” the Lagos State Governor said.
The emergency session came at a time of heightened insecurity in several parts of the country, with increasing calls for both federal and state authorities to take coordinated action to help the economy.
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