Cautiously Optimistic

The opportunities and challenges for Africa’s economic growth in 2019

Africa enters 2019 facing a sluggish and unstable world economy. Global markets remain jittery as the U.s.-launched trade war with China starts to affect African economies negatively. As an African proverb goes, “When elephants fight, it is the grass that suffers.” For Africa to realize its own development, it requires a thriving world market and stable global order. The International Monetary Fund (IMF) has projected that three of Africa’s major economies - Nigeria, South Africa and Angola - will witness sluggish growth in 2019. According to Milesi Ferretti, Deputy Director in the Research Department of the IMF, “The continent could do much better once these economies are on more solid footings, particularly South Africa and Nigeria, because they are really large [economies] and affect a number of countries in their neighborhood.” The entire Sub-saharan African economy will be expected to rise from 3.1 percent in 2018 to 3.8 percent in 2019. This is insufficient economic growth to boost the much-needed job creation for the growing population of the region, according to the IMF.

Positive outlook

On the positive side, African Union (AU) Agenda 2063 vision has received a shot in the arm with massive infrastructure development projects in Ethiopia, Nigeria, Morocco, Djibouti, Kenya, Uganda and Rwanda. The Mombasa-nairobi Standard Gauge Railway developed by China in Kenya is being extended to Naivasha, with a potential to cross into neighboring Uganda. These infrastructure projects will increase regional integration on the continent, and encourage intra-africa trade, while also freeing the movement of people and goods.

The relationship between Africa and China will gain momentum with the achievements made at the 2018 Beijing Summit of the Forum on China-africa Cooperation (FOCAC), where China committed a further $60 billion for Africa-china cooperation. Africa’s traditional partners in Europe, the United States, the Middle East and Latin America are increasingly showing interest in investing in Africa. As it stands, Africa needs $93 billion per annum to close the infrastructure gap.

Similarly, South Africa has set aside 400 billion rand (about $28.1 billion) for infrastructure development. Lessons from other countries show that when economies are undergoing depression, it is wise to invest in infrastructure projects to boost employment and improve economic drivers for long-term development.

At the Horn of Africa, Ethiopia will continue showing double-digit economic growth, and their prized Ethiopian Grand Renaissance Dam is almost completed. This dam alone has a potential of supplying much-needed energy for the fast growing Ethiopian economy, as well as neighboring countries. Ethiopia will benefit enormously from the peace dividend brought about by the signed peace treaty with neighboring Eritrea.

South Africa, Nigeria and the Democratic Republic of the Congo will be undergoing general elections soon. These elections are expected to bring stability to these countries. In South Africa, President Cyril Ramaphosa’s African National Congress party appears ready to retain political power after nine years of instability brought about by former President Jacob Zuma. Zimbabwe, Angola and Nigeria will continue to bring more certainty for investors in 2019.

Africa’s priorities

In 2019, Africa’s institutions of peace and security, such as the Regional Economic Communities and the AU, will need to double their efforts in stabilizing the continent on matters of governance. The AU declared 2018 as the year of the fight against corruption. The transformation of global institutions of political and economic governance such as the UN Security Council, the World Bank, the IMF, G20 and the World Trade Organization should include Africa and give priority to African issues. For this to happen, Africa requires champions and lobbying of strategic partners such as China, Russia and others to advance the African agenda in global affairs.

With a population of above 1 billion, Africa should prioritize education, health and small and medium businesses to provide its young population with a better chance at