After three years of sluggish growth, the Sub-Saharan African (SSA) region looks set for “excellent growth” of 8% over the next four years to 2022, according to Africa House director, Duncan Bonnett. “Remove the big three laggards – South Africa, Nigeria and Angola – and it’s even better,” he said. Southern Africa was the worst performing region with Angola, Mozambique, Zambia and the Democratic Republic of Congo (DRC) all hit by commodity price declines and Zimbabwe, Swaziland, Malawi struggling with a combination of commodity prices, drought and poor governance, he added. Bonnett said that within the SSA region, East Africa was the biggest driver of growth with the East African Community (EAC), the only regional economy that had not contracted at all. He believes this is largely because it is not a commodities or extractives dependent region, with mining and oil and gas only recently starting to “become of some importance”. “If one takes the region’s two largest economies – South Africa and Nigeria – out of the overall regional equation, East Africa emerges as the largest regional economy by 2018,” said Bonnett. East Africa was set to cumulatively grow its economy by 77.7% over the next four years, he added. The Southern African Development Community (SADC) region’s growth is set for only a cumulative growth of 28.5% excluding South Africa. If SA is calculated with SADC, that growth projection drops to 24.9%. Bonnett said most major commodities in the region were also expected to show a slight improvement in prices in 2017, continuing through to 2018, although the coal price was likely to remain uncertain due to a lower output in China which was countered by a shift to renewables. “However, renewed Indian demand for coal may drive prices up a little,” he added. Bonnett also predicted a good recovery in oil prices, observing however that this would likely still be well below the highs experienced in 2013, which, according to him may not be quite good enough to kick-start projects in the region yet. Projections are that the prices for liquefied natural gas (LNG) and copper will both recover steadily, but slowly, while iron ore, gold and silver prices are set to decline.
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If one takes South Africa and Nigeria out of the overall regional equation, East Africa emerges as the largest regional economy by 2018. – Duncan Bonnett
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