If Nigeria moves, the whole of West Africa moves with it. And now the International Monetary Fund (IMF) and others are predicting a major slowdown in the Nigerian economy – Africa’s largest.
A drop of more than 50% in the oil price over the past year has hit Africa’s biggest oil exporter very hard, and its currency – the naira – has taken a tremendous knock. Things are now at the point where the Central Bank of Nigeria is restricting the import of certain goods to keep money inside the country, and police are trying to crack down on black market currency traders. In a survey, service firm Deloitte found that Nigeria only grew 2.57% in the second quarter of 2015: not a good rate at all when compared to the rate of almost 8% in previous years.
Things are not looking too rosy on the rest of the continent either. Ghana is also suffering terribly because of its weak currency and the drop in the oil price, Zambia is sliding due to a much lower copper price, and South Africa continues to grow at a snail’s pace, with gloomy short-term growth prospects. While South Africans seem to have come to terms with the sorry state of their currency, the rand, Ghanaians and Zambians are still dumbstruck at how little their money is now worth. Angolans are also obliged to dig deep in their pockets for imported goods, with a kwanza worth 25% less than a year ago against the dollar. Exceptionally, Francophone Africans are at a slight advantage when it comes to the currency game. The CFA Franc, used in most of former French colonies in West and Central African countries, is pegged at a fixed rate to the Euro.
Compounding the negative picture is the threat of terrorism; lingering conflict in areas like South Sudan, the Central African Republic, Nigeria and Somalia; and political uncertainty surrounding a number of important upcoming elections in places like the Democratic Republic of Congo (DRC) and Uganda next year. Long-serving leaders have taken heart from the dismal example of Pierre Nkurunziza in Burundi, and a range of constitutional amendments to allow for third terms appears to be on the cards.
While oil producers like Nigeria, Angola, Gabon, Cameroon and Ghana will certainly lose out due to the low oil price, some importers of oil might conversely benefit from this. This excludes countries like Uganda, who have banked on new oil projects that might now have to be put on hold. Economic stars on the continent are Ethiopia, Côte d’Ivoire, the Democratic Republic of the Congo and Mozambique.
The good news is that Africa is rising, although not for all Africans. We need to work harder if we are to end conflict and grow inclusively and sustainably across the continent.