Kevin Nyango
In a Risk Frontiers 2017 which was hosted in London, the speech gave by one of the speakers Stéphane Colliac gave African and investors hope on the African economic growth. Colliac said that despite the fact that there is an increase in the African debt at 32% of the regions Gross Domestic Product (GDP), it is still below the previous rise of 55% in 2002. This gives hope on the future developments.
It was noted that the great pillar behind the African economy is urbanization which gives countries like Nigeria a great deal for rising the moment their institutions absorb the importance of organizing and developing each sector all the way from the launch. In various national economies like Kenya, Rwanda, Morocco, Ethiopia and Senegal there have been notable changes which have helped in improving the business atmosphere.
Egypt is viewed as the country that can be the African economic pillar. Major reforms in the exchange rates, subsidies and limited loosening of capital controls in the country has gone up in relation to the short-period funding from International Monetary Fund (IMF) and private sectors. The country was ranked high in both Middle East and Africa in 2016 for the direct foreign investment category. The potential is soon to be realized, people just have to be patient with the stability.
Financial constraints in running various sectors have called for the African countries to call for support from various funding institutions. The lack of enough cash was facilitated by poor savings when the prices of commodities went high making it difficult for the African countries to cope with the shock. The expectations are that countries that export natural resources like oil for these case countries like Nigeria, Libya, Algeria and Angola should not have financial difficulties, but the fact that the countries are depending too much on the commodities leading to the volatility of fiscal revenue.
Colliac noted that the debt increase varies from one country to the other. He cited an example where the current Nigerian debt is viable while Angola’s debt is 80% of its GDP. With such debt however much a country is funded, there will still problems with the liquidity in relation to exchange rate volatility.
Inflation also plays a key role in the economic growth in the region and this depends on how the regional banks try to solve it. The system of government is so crucial since investors only tend to be attracted to governments that support democratic institutions rather than the dictatorial governments. Colliac gave an example to Kenyan judiciary which called for a re-run in the presidential elections and that was respected by all the participants that shows the maturity in Kenyan democracy. Such leadership tends to attract investors than compared to dictatorial countries like Gabon.
There is a need to for the African countries to embrace the growing world of technology. With the statistics showing that a good number of people are owning mobile phones, there are no need of using liquid cash in most of their businesses they should rather encourage payments through phones.
