Most African countries have a positive economic outlook, apart from those with upcoming elections, according to ICAEW’s (the Institute of Chartered Accountants in England and Wales) latest report. In Economic Insight: Africa Q4 2018, launched today, the accountancy body provides GDP growth forecasts for various regions including East Africa which is set to grow by 6.3%, Western and Central Africa by 2.5%, Franc Zone at 4.6% and South Africa by 1.2%.
The report, commissioned by ICAEW and produced by partner and forecaster Oxford Economics, provides a snapshot of the region’s economic performance. The regions include; East Africa, Central and West Africa, Franc Zone, Northern Africa and Southern Africa.
According to the report; East Africa continues to report the highest GDP growth on the continent even though the region’s economic growth is expected to ease slightly, from 6.8% in 2017 to 6.3%. Ethiopia reported the highest forecast at 7.8%, while the lowest forecast for the region was at -3.8%, by war-torn South Sudan.
However, lower growth ranking for some countries in the region demonstrate how large an effect political instability can have on economic prospects. For example Kenya’s growth rebounded to 5.4% this year after it dropped to 4.9% in 2017. The drop was attributed to political uncertainty during last year’s elections.
Michael Armstrong, Regional Director, ICAEW Middle East, Africa and South Asia said: “Political instability tends to peak around election time for some African nations. This scenario tends to dampen the GDP growth of some countries, since economic growth shares a complex relationship with both elections and accompanying political instability.”
In West and Central Africa average growth is forecast at 2.5%. Ghana’s forecast is expected to expand by a decent 5.2%, highlighting a stable economy. However, this is not so for Africa’s largest economy, Nigeria whose growth is forecast at 1.8%. The weak performance can partly be attributed to the upcoming elections in February next year.
There is little uncertainty about who will win elections in the Democratic Republic of Congo (DRC) in December, but political tensions are set to rise nonetheless, and are the main obstacle to the GDP growth forecast of 4.1% this year.
The elections narrative is still replicated in Southern Africa, being the slowest region with GDP forecast set to expand only by 1.2%. Election rhetoric regarding land and property rights in South Africa ahead of polls in 2019 has frightened investors.
As a result, President Cyril Ramaphosa is finding it difficult to convince them otherwise. The country is expected to post GDP growth of just 0.7%.
The Franc Zone is expected to see GDP growth of around 4.6% this year. Cameroon is expected to post a GDP growth rate of 4.0% this year – up from 3.2% in 2017. This is despite the unpopular re-election of President Paul Biya and the violence that accompanied his re-election.
Elections and accompanying political instability evidently have a complex relationship with economic growth.