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Falling on their feet
“The bigger they are, the harder they fall” is an adage familiar to anyone who played sports in their youth – or at least those who looked worryingly at an opponent who had clearly gone through a growth spurt a few years early.
The same adage might be said of Africa’s economies. After a long stretch of seemingly boundless growth, many of the continent’s biggest markets have come to an abrupt halt. Ghana, which back in 2011 grew by nearly 15%, grappled with a budget deficit last year that exceeded targets by roughly one-third. Nigeria, which doubled its GDP following a rebasing exercise a few years ago, is climbing out of a recession. Even Côte d’Ivoire, which has successfully avoided many of the woes other sub-Saharan markets have faced, has been forced to cut spending thanks to the drop in cocoa prices.
The stumbles seem all the starker following the unalloyed bullishness of the Africa Rising era, but there is still cause for optimism. While the performance of the continent’s economies has fallen – and in some cases, fallen hard – many of them have at least fallen on their feet.
Our latest Africa Economic Roundup highlights this, featuring analyses of the aggressive moves taken by governments across Africa to reduce current spending, float currencies, restructure public companies and improve infrastructure networks.
ARTICLES
1) Viewpoint: President Nana Akufo-Addo
"A strong economy creates opportunities and inspires more people to start new businesses. In much the same way, a strong economy encourages existing businesses to make new investments to grow and expand. Our goal is simple – to build the most business-friendly and people-friendly economy in Africa; one that will create jobs and prosperity for all Ghanaians..." Read More
2) Interview: Akinwumi Adesina, President, African Development Bank (AfDB)
"Several commodity exporters in Africa, including South Africa, Zambia, the Democratic Republic of Congo and oil exporters such as Nigeria, Algeria, Angola, Chad, Equatorial Guinea, Gabon and the Republic of Congo have been severely hit by the dip in commodity prices and the slowdown in China’s economy. These events have led to significant revenue shortfalls in these countries...."
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3) Egypt's central bank floats pound to increase liquidity amid US dollar shortage
Despite the challenging economic environment, the industry remains adequately liquid in local currency terms. The core liquid assets of Egypt’s lenders, made up of cash held and deposits with the central bank and foreign banks, accounted for 23% of total deposits at the end of November 2015, according to Bank Audi. This figure represented a healthy increase on the 19% liquid assets to total deposits ratio seen at the close of 2014, and is comfortably above the 20% limit established by the regulator, the Central Bank of Egypt (CBE)... Read More
4) Cote d'Ivoire's strong solar and biomass potential help transform energy sector
As a result of strong economic growth, boosting production capacity in Côte d’Ivoire has become a government priority against the backdrop of rising domestic electricity demand. While the bulk of this new capacity is set to come from new thermal power plants and hydroelectric dams, other renewable energies play an important role in the government’s energy expansion strategy. At present, Côte d’Ivoire’s renewable energy capacity consists mainly of hydroelectric dams but it has demonstrated significant potential in other renewables such as biomass and solar energy...
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5) Enhancing liquidity management in Algeria's financial services
Although the Algerian financial sector’s coverage rates remain healthy – particularly by emerging market standards – the dramatic drop in hydrocarbons receipts since 2014 has brought a swift end to more than a decade of abundant liquidity. As broad money growth contracted to near zero in 2015, banks saw their liquid assets fall to 27.2% of total assets, down from 38% in 2014, according to the IMF’s 2016 Article IV consultation. This shift resulted primarily from an 11.9% expansion of lending to the economy at the same time that deposits contracted, according to figures from the Bank of Algeria (BoA). Short-term deposits shrunk by 12.4% in 2015, propelled by a 41.1% reduction in hydrocarbons deposits...
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6) Interview: President Abdel Fattah El Sisi
"The Egyptian government has a set of clear priorities and objectives embodied in the sustainable development strategy Egypt’s Vision 2030. This multi-dimensional strategy includes achieving both economic and social goals, whereby social justice should be established in tandem with realising higher economic growth rates. The vision is to have a fair, interdependent society that reinforces the principle of citizenship, and ensures the rights of every Egyptian to participate in rebuilding a new modern Egypt based on equal chances and the rule of law. Our aim is to establish a society that also provides protection and support to marginalised and vulnerable citizens..."
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