Africa’s growth to continue to decelerate

The slowdown has been attributed to global uncertainty, like the US-China trade war.

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By ANTONY MuTUNGA

Sub-Saharan Africa has continued to produce among the fastest growing economies in the world in the last five years. Despite this achievement, the region has seen its overall economic growth take a hit, consistently recording below 3 percent since 2015. According to Africa’s Pulse report by the World Bank, sub-Saharan Africa has recorded economic growth of 3 percent, 1.6 percent and 2.7 percent between 2015 and 2017.

The trend continued into 2018 when the region recorded a weighted growth of 2.3 percent. Not only was this a slowdown economically but it also trailed the region’s mean population growth. According to data from the World Population Review, the annual population growth rate stood at 2.66 percent in 2018.

The slowdown has been attributed to global uncertainty, such as the US-China trade war that has caused the demand for African exports to dip. With the US placing tariffs on billions of dollars’ worth of Chinese products, such as industrial and consumer goods, China’s manufacturing industry has been hard-hit, which in turn has caused the Chinese economy to weaken. China, being Africa’s largest trading partner, has had to reduce its imports from the continent in a bid to strengthen its economy. 

This has caused considerable harm to some of Africa’s commodity-driven economies. For example, countries such as South Sudan and Angola, which relied on China’s need for resources have seen that demand reduce. In fact, according to the African Development Bank, the trade tensions could lead to a further reduction of 2.5 percent for resource-intensive exporters in the continent. The trade war has not only affected the Sino-African relationship but also African-American relationship. For African economies supplying the US with commodities used in making products that mainly export to China, the toll has been considerable. 

In addition, with trade upheavals causing the global economy to slow down, Africa, which depends much on external borrowing, will find it difficult to acquire concessional loans. As a result, it means that African governments have to cut back on public expenditures, which would a further blow to country economies.

Apart from global uncertainties, the sub-Saharan region has also seen individual economies encounter challenges in terms of their growth. The fact that three of the largest economies – Nigeria, South Africa and Angola –experienced sluggish development during the first half of 2018 affected the rest of the continent. For instance, South Africa had slipped into a recession in the first half due to compressed earnings from mining, agriculture and construction. The economy declined by 2.6 percent in the first quarter and by a further restated 0.7 percent in the second quarter. 

On the other hand, Nigeria also faced a tough first half of 2018 as the shut-down of some pipelines such as Trans Ramos saw oil production fall and the country lose billions daily. In addition, the country also saw the service sector contract as land conflicts between farmers and herders disrupted agricultural activities. As a result, the GDP growth of Nigeria reduced from 2 percent in Q1 of 2018 to 1.5 percent in Q2.  

The continent’s second largest oil exporter, Angola, also faced challenges in oil production. According to its ministry of Mineral Resources and Oil, due to lack of fresh investments and a fall in crude prices. As a result, the country moved from producing 1.9 million barrels of oil per day to 1.5 million.

Sudan also experienced a deep recession which saw the economy run into a crisis. As a result of letting the value of the country’s currency weaken against the dollar, the demand for cash led to a liquidity crunch. This, in turn, caused consumption and investments in the country to reduce. 

The vital lesson here is that Africans must restructure their economies to reduce the effects of the US-China trade war. For example, it can increase intra-regional trade as a measure against these effects. (

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