Africa falls off Davos radar

INVESTORS AWAY Not too many international investors are looking Africa’s way as it lurches through tumultuous times. COUPS AND DEFAULTS DRIVE

The “Africa rising” narrative that captured the attention of world leaders in Davos in past years was noticeably absent from this year’s event. Sub-Saharan Africa’s economies, described a few years ago as “lions on the move”, expanded just 1.6% last year according to the World Bank – the slowest rate in two decades.

Instead, investors were reminded afresh of Africa’s fragile record on democracy and governance – joint African forces were prepared to oust Gambian leader Yahya Jammeh, who initially refused to step down after losing elections. And a debt default in once-promising Mozambique could be the first of many across the continent.

This year, many political and business leaders were preoccupied with the inauguration of US President Donald Trump on Friday and fractures in Europe.

Other forum attendees also acknowledged a change in focus from addressing the problems of the developing world, as Western leaders struggle with popular rage against company bosses, bankers and migration.

That shift coincides with a lacklustre economic picture.

PWC’s annual survey released at the summit showed Africa was the only region where company chief executives said they had waning short-term confidence, bucking the robust mood in other emerging economies. Currency risks, the availability of talent and the possibility of social unrest or corruption were cited as reasons.

This is why Africa warrants more focus, said Mukhisa Kituyi, secretary general of UN trade and development agency UNCTAD.

“We are seeing countries which are on the brink of default on debt. If [US] interest rates rise quickly many countries ... will quickly move into insolvency. The knockon effects will be very substantial”

Nigeria, Africa’s biggest economy, is in recession and in danger of a currency crisis. The continent’s most industrialised economy, South Africa, celebrated for its post-apartheid democratic transformation, is struggling with sluggish growth and political squabbles that could see it lose its investment grade credit rating this year.

Nigerian tycoon Aliko Dangote said African governments needed to stick to commitments made to investors. “But the moment you take the risk, if things turn out well, the government will say, ‘let me remove this tax holiday’.”

Many of those who rejected the Africa Rising narrative are not convinced Africa is sunk.

Recent UN data showed that while stock and bond investment into Africa collapsed in 2016, “direct” bricks-and-mortar investment held steady at $82 billion. Charles Robertson, global chief economist at Renaissance Capital, compares east African states Rwanda, Kenya, Tanzania, Uganda and Ethiopia to South Korea in 1960, poverty-stricken before its industrial boom.

Annual growth is running at a solid 5-7% in those five countries. –