Africa’s growth was supposed to accelerate in 2018. It will not, as growth should stall at +3.3%. The disappointment is concentrated in some commodity exporters, those where weak institutions and business environment prevented appropriate investment in the past. As a result, higher commodity prices are not the bonanza that they were supposed to be. Output goals were missed and growth is disappointing. South Africa is a case in point (+0.7% growth in 2018), but this example is not isolated. Algeria (+1.8%), Angola (+0%) and Nigeria’s (+2%) outlooks also had to be revised on the downside due to weaker than expected performances in H1 in their commodity exporting sector. Debt and liquidity are aggravating factors in some cases, weighing on day to day business operations. This issue is now pervasive in some southern African economies, where past debt financing of the current account deficits is proving to be bad cholesterol. Zambia is a case in point, as foreign reserves dropped to about 2 months of import cover.
