Nigeria, South Africa to drag Africa’s growth

In this file photo taken on May 15, 2017 outside state entity Eskom Offices at Megawatt Park in Johannesburg, members of South African political party Congress of the People (COPE) demonstrate against the re-instatement of Brian Molefe as Eskom CEO.

Economic disruption from uneven currency trading in Nigeria and continued electricity shortages in South Africa are set to hold back overall growth across sub-Saharan Africa this year, a Reuters poll of economists found on Thursday.

Since commodity prices collapsed four years ago, the region has largely missed out on the global economic recovery, with growth failing to return to rates seen in previous years and set to remain subdued.

The survey, taken in the past week, shows Nigeria, Africa’s largest economy, is expected to grow 2.4 per cent this year and 2.8 per cent next year.

South Africa, the number two economy on the continent, will grow 1.3 per cent this year and 1.7 per cent in 2020.

The 2019 forecasts for the two countries, which together drive around half of the wider region’s growth, are both 0.1 percentage points lower compared to the last survey for Nigeria in January and March’s poll for South Africa.

“Tepid growth in South Africa is one reason why we expect that growth across Sub-Saharan Africa will remain disappointing in 2019,” said John Ashbourne, an economist at Capital Economics in London.

Creaking infrastructure at South Africa’s state power utility Eskom is taking longer to fix than economists previously thought. Rolling power cuts as it struggles with capacity shortages threaten to stymie President Cyril Ramaphosa’s efforts to boost investments and economic growth.

In Nigeria, multiple currency exchange rates designed to deal with dollar shortages following a slump in global oil prices in 2015 have undermined its economy.

Ashbourne said that keeping the naira artificially strong in 2015 prevented the economy from adjusting to lower oil prices.