United Capital has revealed that slower than required recovery in key markets, notably South Africa, Nigeria and Angola, may drag the expected Sub-Saharan Africa (SSA) growth in 2021.
This is according to its latest report, Nigeria Outlook 2021 — A Shot at Recovery, published this month.
The company said even though the IMF asserts that regional growth will rebound to 3.1% in 2021, many SSA countries will not return to 2019 output levels until 2022-24.
According to the report…
- The region recorded its first recession in three decades last year, mainly due to the negative effects of the Covid-19 pandemic on economies. Among other things, the negative effects of the Covid-19 pandemic affected commodity prices across the region so that organisations recorded and are still recording declined revenues and huge costs.
- Countries whose economies are dependent on tourism (Mauritius: -32.9%, Seychelles: -17.0%) were the hardest hit, with sharp GDP contractions in Q2-2020. Results of listed companies in the hotel and tourism space in selected SSA countries also picture declining fortunes.
- Oil exporting countries including Nigeria and Angola followed suit. South Africa, which is more of a diversified economy also recorded a -17.1% contraction in Q2-2020.
- Although SSA countries are so far the least affected by the Covid-19 pandemic, recovery is projected to be slower compared with developed regions and some other developing regions.
- In addition to the fragile state of the economy of most SSA countries prior to the pandemic, weak policies are also a contributory factor to the projected drag in recovery.
The report notes that in 2021 growth in the region will be driven by a few factors:
- The ability of SSA economies to keep the spread of the coronavirus pandemic at bay amid potential vaccination bottlenecks and financial distress will be a significant factor, as the region must avoid another round of unaffordable lockdowns.
- The implementation of the AfCFTA trade agreement, now scheduled to begin from January 2021 rather than July 2020, and the commitment of major economies such as Nigeria and South Africa to the success of the pact will also play a significant role.
- Fiscal policy operations, supported by access to more concessional financing, relief, and private financing amid bold policy reforms, will help bolster recovery.
What you should know
- The report, Nigeria Outlook 2021 — A Shot at Recovery — considered global economy, Sub-Saharan Africa, Domestic Macro and Policies, Financial markets key sectors as well as companies.
- Part of the global economy was suspended in Q1 2020 with majority joining in Q2 and most in Q3 2020 to safeguard human health.
- In Q3 2020, the global economy began to reopen as countries looked to recover from the negative effects of the pandemic.
- The second wave of infections, which began in many advanced markets, particularly in the United States and Europe, is however, halting the reopening of economies.
- That countries are beginning to reintroduce lockdowns as a result of the second wave appears to mean that forecasts, especially the favourable ones, may be altered.
- Aside from lockdown measures, productive policies are also needed to scale through as lockdowns only curtail the spread of the virus; but lockdowns spread economic pressures, especially in low-income and fragile economies.
IMF optimistic about global economy but warns new Covid variants could affect recovery
IMF is quite optimistic about the fortune of the global economy but expressed fear that the new Covid variant could derail economic recovery.
The International Monetary Fund (IMF) has expressed optimism about the global economy but warns that the new COVID 19 variant could affect the global economic growth, according to its latest World Economic Outlook.
According to the report, “the institution now expects the global economy to grow 5.5% this year — a 0.3 percentage point increase from October’s forecasts. It sees global GDP (gross domestic product) expanding by 4.2% in 2022”.
According to its Chief Economist, Gita Gopinath:
- “Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens.
- “There remains tremendous uncertainty and prospects vary greatly across countries.
- “China returned to its pre-pandemic projected level in the fourth quarter of 2020, ahead of all large economies. The United States is projected to surpass its pre-Covid levels this year, well ahead of the euro area.
- “Policy actions should ensure effective support until the recovery is firmly underway, with an emphasis on advancing key imperatives of raising potential output, ensuring participatory growth that benefits all, and accelerating the transition to lower carbon dependence.”
What you should know
- There has been a surge in the number of reported cases of the new variant Covid-19 infections and deaths over the past few months.
- The new variant has been described as being more infectious and potentially deadlier than the original strain.
- The IMF had cut its GDP forecasts for the euro zone this year by 1%.
- It is being projected that the 19-member region, which has been severely hit by the pandemic, would grow by 4.2% this year.
- Germany, France, Italy and Spain — the four largest economies in the euro zone — also saw their growth expectations cut for 2021.
- Economic activity in the region slowed in the final quarter of 2020 and this is expected to continue into the first part of 2021. The IMF does not expect the euro area economy to return to end-of-2019 levels before the end of 2022.
- IMF revised its GDP forecast upward by 2% points on the back of a strong momentum in the second part of 2020 and additional fiscal support, with GDP expected to grow to 5.1% this year.
Updated: President Buhari appoints new Service Chiefs
President Buhari has appointed new Service Chiefs to replace the former with immediate effect.
President Muhammadu Buhari has appointed new Military Service Chiefs, and congratulated the outgoing Service Chiefs for efforts of “enduring peace to the country.”
The appointments was disclosed by Presidential media aide, Femi Adesina in a social media post on Tuesday.
Adesina said: “PMB appoints new Service Chiefs. Maj Gen LEO Irabor, CDS, Maj Gen I Attahiru, Army, Rear Adm AZ Gambo, Navy, AVM IO Amao, Air Force. He congratulates outgoing Service Chiefs on efforts to bring enduring peace to the country.”
President Buhari had come under heavy criticism in the last couple of years over his failure to sack the Service Chiefs for failing to tackle insecurity in the country.
“I have accepted the immediate resignation of the Service Chiefs, and their retirement from service. I thank them all for their overwhelming achievements in our efforts at bringing enduring peace to Nigeria, and wish them well in their future endeavours,” Buhari disclosed in a separate statement.
I have also appointed new Service Chiefs, to replace the retired officers:
Major-General Leo Irabor, Chief of Defence Staff
Major-General I. Attahiru, Chief of Army Staff
Rear Admiral A.Z Gambo, Chief of Naval Staff
Air-Vice Marshal I.O Amao, Chief of Air Staff.
— Muhammadu Buhari (@MBuhari) January 26, 2021
What you should know: The outgoing Service Chiefs were appointed by President Buhari in 2015 and despite clamour from several quarters for the President to replace them with fresh blood, nothing happened until today’s announcement.
Investing in digital economy, infrasture crucial to mitigate impact of COVID-19 pandemic – World Bank
Investing in digital economy will be crucial to mitigate the impact of COVID-19 and foster a sustained recovery in Sub-Saharan Africa.
The World Bank has asserted that investing in the digital economy and infrastructure will be crucial to mitigate the impact of the COVID-19 pandemic and foster a sustained recovery and foster a sustained recovery in Sub-Saharan Africa.
This is according to the World Bank In Africa report – #AFRICAN CAN.
The report noted that in a time of Covid-19, dominated by lockdowns and social distancing, investing in the digital economy and infrastructure will be crucial to mitigate the impact of the COVID-19 pandemic and foster a sustained recovery.
It argued that the adoption of digital technologies by governments, households and firms in Sub-Saharan Africa still lags behind that of other regions in the world.
The report, therefore, maintains that government intervenes to reduce the cost of devices and services, avoid disconnections for lack of payment, and increase bandwidth will be key, considering that the road to economic recovery is projected to be long and arduous.
What they are saying
The report states that:
“The road to recovery will be long and arduous and will require policies and investments that focus on connecting people to job opportunities, which can help end extreme poverty, particularly post-COVID-19.”
What you should know
Even though the World Bank did not suggest the form that the policies and investments would take in the report, the Bank, in a separate report — flagship report – Global Economic Prospects – as reported by Nairametrics on the 19th of January, 2021, has argued that productivity-enhancing structural reforms are required for quick economic recovery.
The Bank suggests these productivity-enhancing reforms encompass promoting education, effective public investment, sectoral reallocation, and improved governance. Investment in green infrastructure projects can provide further support to sustainable long-run growth while also contributing to climate change mitigation.
According to the report:
- Sub-Saharan Africa is home to more than 1 billion people, half of whom will be under 25 years old by 2050.
- It is a diverse continent offering human and natural resources that have the potential to yield inclusive growth and wipe out poverty in the region, enabling Africans across the continent to live healthier and more prosperous lives.
- With the world’s largest free trade area and a 1.2 billion-person market, the continent is creating an entirely new development path, harnessing the potential of its resources and people.
- Knowledge is essential for governments to make better policies and institutions to make more effective decisions, thus, governments should pay attention to research and analysis.
According to World Bank’s Flagship report – Global Economic Prospects.
- Investment is projected to shrink again this year in more than a quarter of economies – primarily in Sub-Saharan Africa (SSA), where investment gaps were already large prior to the pandemic.
- Growth in Sub-Saharan Africa is expected to rebound only moderately to 2.7% in 2021 – 0.4% point weaker than previously projected, before firming to 3.3% in 2022.