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 United Arab Emirates has announced its decision to quit the Organisation of the Petroleum Exporting Countries (OPEC) to focus on national interests.
This dealt a heavy blow to the oil-exporting group at a time when the US-Israel war on Iran had caused a historic energy shock and rattled the global economy.
The move, which will take effect on May 1, 2026, reflects “the UAE’s long-term strategic and economic vision and evolving energy profile”, a statement carried by state media said on Tuesday.
“During our time in the organisation, we made significant contributions and even greater sacrifices for the benefit of all,” it added. “However, the time has come to focus our efforts on what our national interest dictates.”
The loss of the UAE, a longstanding OPEC member, could create disarray and weaken the oil cartel, which has usually sought to show a united front despite internal disagreements over a range of issues from geopolitics to production quotas.
UAE Energy Minister Suhail Mohamed al-Mazrouei said the decision was taken after a careful look at the regional power’s energy strategies.
“This is a policy decision. It has been done after a careful look at current and future policies related to the level of production,” the minister said.
OPEC’s Gulf producers have already been struggling to ship exports through the Strait of Hormuz, a narrow chokepoint between Iran and Oman through which a fifth of the world’s crude oil and liquefied natural gas supplies normally pass, because of threats and attacks against vessels during the war.
The UAE had been a member of OPEC first through its emirate of Abu Dhabi in 1967 and later when it became its own country in 1971.
The oil cartel, based in Vienna, has seen some of its market power wane as the US has increased its production of crude oil in recent years.
Additionally, the UAE and Saudi Arabia have increasingly competed over economic issues and regional politics, particularly in the Red Sea area.
The two countries had joined a coalition to fight against Yemen’s Iran-backed Houthis in 2015. However, that coalition broke down into recriminations in late December when Saudi Arabia bombed what it described as a weapons shipment bound for Yemeni separatists backed by the UAE.
By Adedapo Adesanya
Central Securities Clearing System (CSCS) Plc bested four price decliners on the NASD Over-the-Counter (OTC) Securities Exchange on Monday, April 27. The alternative stock market opened the week bullish during the session with a 0.03 per cent uptick.
According to data, the security depository company added N2.61 to its share price to close at N76.26 per unit compared with the preceding session’s N78.87 per unit.
As a result, the market capitalisation of the platform increased by N820 million to N2.425 trillion from N2.424 trillion, and the NASD Unlisted Security Index (NSI) gained 1.38 points to finish at 4,053.97 points compared with the 4,052.58 points it ended last Friday.
The four price losers were led by NASD Plc, which slumped by N3.80 to sell at N34.70 per share versus N38.50 per share. FrieslandCampina Wamco Nigeria Plc fell by N1.45 to N98.10 per unit from N99.55 per unit, Food Concepts Plc slid by 27 Kobo to N2.43 per share from N2.70 per share, and Geo-Fluids Plc dipped by 9 Kobo to N2.91 per unit from N3.00 per unit.
The value of securities transacted by market participants went down by 82.0 per cent to N7.4 million from N41.3 million units, the volume of securities declined by 28.5 per cent to 319,831 units from 447,403 units, and the number of deals dropped by 34.1 per cent to 29 deals from 44 deals.
Great Nigeria Insurance (GNI) Plc was the most active stock by value on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by CSCS Plc with 59.6 million units sold for N4.0 billion, and Okitipupa Plc with 27.8 million units exchanged for N1.9 billion.
Also, GNI Plc was the most traded stock by volume on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by Resourcery Plc with 1.1 billion units traded for N415.7 million, and Infrastructure Guarantee Credit Plc with a turnover of 400 million units worth N1.2 billion.
By Adedapo Adesanya
The first trading day of the week in the currency market was bearish for the Naira in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Monday, April 27.
Yesterday, it lost N5.80 or 0.43 per cent against the United States Dollar to trade at N1,364.24/$1, in contrast to the N1,358.44/$1 it was traded last Friday.
In the same vein, the Nigerian currency depreciated against the Pound Sterling in the official market by N13.70 to close at N1,847.72/£1 versus the preceding session’s N1,834.02/£1, and slumped against the Euro by N11.56 to sell at N1,602.29/€1 versus N1,590.73/€1.
Also, the Nigerian Naira tumbled against the greenback during the trading day by N5 to quote at N1,385/$1 compared with the previous rate of N1,380/$1, and at the GTBank FX desk, it traded flat at N1,370/$1.
The poor performance of the domestic currency could be attributed to liquidity shortage at the official currency market on Monday, which came amid surging demand for international payments. At $76.50 million, interbank liquidity printed higher across 79 deals, up from the $43.572 million reported on Friday.
Nigeria’s gross external reserves declined to $48.45 billion amid a month-long decline in inflows, amid uncertainties in the global commodity market. The depletion of foreign reserves could be partly attributed to the Central Bank of Nigeria’s intervention in the FX market.
The market remains perturbed by persistent concerns over liquidity constraints, policy transparency, and weakening confidence in Nigeria’s FX market, while boosters, including oil prices, continue to look rocky due to stalled discussions and unclear ceasefire negotiations between the US and Iran.
A look at the cryptocurrency market, Bitcoin (BTC) has been rejected near $79,000 three times in eight sessions, leaving the level as the de facto ceiling of its current trading range even as major cryptocurrencies trade lower over the past day. It lost 0.9 per cent to sell at $77,003.61.
Analysts say that upcoming US Federal Reserve policy decisions and top tech firms’ earnings this week could provide the catalyst to push bitcoin decisively above $80,000.
The market also continued to weigh Iran’s interim deal proposal to reopen the Strait of Hormuz, which failed to advance over the weekend. The White House said US officials were discussing the latest Iranian proposal but maintained “red lines” on any deal to end the eight-week war.
Solana (SOL) dropped 1.8 per cent to $84.25, Ripple (XRP) went down by 1.6 per cent to $1.39, Ethereum (ETH) depreciated by 1.3 per cent to $2,290.00, Binance Coin (BNB) declined by 0.5 per cent to $625.18, and Cardano (ADA) fell by 0.2 per cent to $0.2480.
However, Dogecoin (DOGE) rose by 2.0 per cent to $0.1002, and TRON (TRX) appreciated by 0.2 per cent to $0.3242, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
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