Political tensions across Africa have had a significant impact on economic growth; however, the majority of the countries in the continent have a positive economic outlook, apart from those with upcoming elections, says a report from the Institute of Chartered Accountants in England and Wales (ICAEW).
In Economic Insight: Africa Q4 2018, launched on December 10, the accountancy body provides GDP growth forecasts for various regions including East Africa which is forecast at 6.3 percent, West and Central Africa as 2.5 percent, Franc Zone at 4.6 percent, and Southern Africa at 1.2 percent. The report underscores political stability as a key economic driver for most African countries.
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, West, and Central Africa, Franc Zone, Northern Africa, Southern Africa.
Kenya’s emergence from a period of political uncertainty should see its GDP growth rebound to 5.4 percent this year after it dropped to 4.9 percent in 2017 – between 2012 and 2016 growth averaged 5.5 percent.
Within the East African region, the narrative around political stability and growth continues to manifest with Ethiopia at 7.8 percent, Rwanda at 7.1 percent, and Tanzania at 6.7 percent, which are considered to all have strong central governments, continuing to be powerhouses while Somalia, Burundi, and South Sudan at 2.4, 0.1, and -3.8 percent, respectively lagging behind.
According to Michael Armstrong, Regional Director for the Middle East, Asia, and Africa, those at the bottom of the growth rankings illustrate how large an effect political instability can have on economic prospects.
“The political instability being experienced in countries like Somalia, Burundi and South Sudan clearly reinforce the strong link between political stability and economic growth. This is the opposite of countries like Kenya for instance which has stabilized ever since the end of the election period early in 2018,” said Mr. Armstrong.
Political instability tends to peak around election time for some African nations. Among these, is Nigeria which is heading to the polls 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 percent this year.
In far more stable territory, Ghana’s economy should expand by a respectable 5.2 percent this year. This is on the back of the boost the industrial sector has received from higher oil prices.
Southern Africa is again the continent’s slowest-growing region with GDP forecast to expand only 1.2 percent this year. Election rhetoric regarding land and property rights in South Africa ahead of polls in 2019 has spooked investors, and President Cyril Ramaphosa is finding it difficult to convince them it will be business as usual. The country is expected to post GDP growth of just 0.7 percent this year.
Zimbabwe’s government, meanwhile, is suffering from post-election credibility difficulties, with international lenders and investors, unconvinced things have changed in Harare after violence and fraud allegations marred July’s election.
In North Africa, Libya and Algeria are scheduled to head to the polls in the near future, in December 2018 and April 2019, respectively, although Libya’s election is unlikely to go ahead. They are also, incidentally, the region’s fastest and slowest growing economies this year at 14.7 and 2.3 percent, respectively.
Egypt, which held elections in March to overwhelmingly return President Abdel Fattah Al-Sisi to power – 97 percent of the vote – is expected to grow by 5.3 percent this year. The certainty of Mr. Al-Sisi’s grip on power appears to be helping the country’s economic rebound.
Finally, in the Franc Zone, which should see GDP growth of around 4.6 percent this year, Cameroon just returned Paul Biya, who is 85, to the presidency. He is Africa’s second-longest serving president after 36 years in power. Despite his unpopularity and the violence that accompanied his re-election, the country is expected to post a GDP growth rate of 4.0 percent this year – up from 3.2 percent in 2017.
Elections and accompanying political instability evidently have a complex relationship with economic growth.