Factors Shaping Africa's Economy
many parts of Africa this year, the price of crude oil, which is determined in
the international market, is shaping the way we live our lives and will
continue to do so in 2015 and beyond.
oil prices have dropped by more than 50% in the last 12 months and the outlook
for prices does not look good.
countries, in particular, are feeling the pressure. Angola, for example, has
announced plans to borrow $25 billion this year ($15 billion through treasury
bills and the balance via external borrowing), as the country’s revenues take a
hit from the steep drop in crude oil prices. The government has also announced
plans to remove fuel subsidies, which cost the country about $2.2 billion a
year and devalue its currency.
Ghana, the government announced that it will scrap the remaining of its fuel
subsidies by September 2015 in a bid to reduce expenditure, which has come
under pressure in the face of dwindling crude oil prices. This is after
successfully arranging a billion dollar facility from the International
Monetary Fund (IMF).
successful and peaceful elections have raised hopes, but the new government is
faced with tough decisions to make in the face of dwindling revenues from crude
oil and the resurgence of Boko Haram activities in Northern Nigeria.
new Nigerian government may be forced to eliminate fuel subsidies and increase
tax collection, while continuing to deliver the many welfare projects promised.
Meanwhile, economic growth has slipped in the first quarter in Nigeria while the
unemployment rate has risen from 6.5% to 7.5% amidst pressure on the country’s foreign
reserves and the Naira which has been devalued by 7.5% in the last six months.
this economic despair is not present all over the continent. Kenya’s economy is
still growing strong, though at a slower pace. The IMF expects that the economy
will grow at a dampened rate of 6.5% this year, as opposed to the 7% growth
rate previously announced. This can be accounted for by rising insecurity in
the country, followed by the tragic Al-Shabab attacks and the softening of
commodity prices.
Republic of Congo’s economy is another bright spot on the continent, with the
IMF forecasting that the country’s economy will expand by 9.2% in 2015, which
will make it one of the fastest growing economies in the world.
following new deep sea recoveries off its south coast, Tanzania’s
current natural gas reserves have been put at about 55 trillion cubic feet
(tcf). These
expected to attract new investments into the country, creating jobs for many
the biggest news that will shape Africa’s economic future is the announcement
that three existing trade blocks, made up of 26 countries with a population of over
600 million people, will create the largest free-trade zone on the continent.
trade blocks are the Southern African Development Community (SADC), the Eastern
African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA).
The treaty will facilitate the movement of free goods and services among the
countries and will allow preferential tariffs between them.
good economic news doesn’t stop there: Liberia has been declared an Ebola-free state,
and the infection rates among Guinea and Sierra Leone have relatively declined.
These reports are expected to lead to a resurgence of economic activities not
only in the affected countries but also in all of West Africa, which will positively
affect travel and tourism across Africa.


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