The effects of a long civil war, an Ebola crisis from 2014 to 2016 and the subsequent withdrawal of peacekeeping forces and aid continue to weigh heavily on the Liberian economy. Estimates of the country’s GDP, and its growth outlook, vary widely. African Development Bank figures indicate GDP growth was an estimated 3.2% in 2018, from 2.5% in 2017, driven largely by growth in mining and manufacturing. It said agriculture, forestry, and fishing dominate the economy, contributing 70.3% of GDP in 2017. It expects GDP growth of 4.7% in 2019 and 4.8% in 2020, but warns of the risk of debt distress, which could increase if borrowing to meet large public investment needs increases while the output of key export sectors declines. The World Bank’s lower estimates put Liberia’s 2018 GDP at 1.2% from 2.5% in 2017. It expects growth to slow to 0.4% in 2019 and remain at about 1.5% over the medium term to 2021, well below the rate of population growth of 2.6%, due to a lack of new investments in the mining sector and a modest improvement in agriculture With inflation reaching 28.5% at the end of 2018 and employment opportunities few, the population remains under serious financial pressure. According to an August article in the Economist, the world has “lost interest” in Liberia, and aid had slumped. United Nations peacekeepers, whose budget was about a quarter of GDP between 2007 and 2018, have gone, leaving a failing economy and weak state beleaguered by corruption. Ex footballer George Weah, elected in 2017, has done little to transform the country’s politics or economy. All Africa reported that the opposition Alternative National Congress has called government “economic criminals” getting large salaries, allowances and benefits, “while the economy bleeds and the citizenry wallop in abject poverty.” There is one area where Liberia remains world class. Who Owns Whom’s report on The Maritime Transport Sector and Marine Manufacturing states that Panama has the world’s largest ship’s registry, followed by the Marshall Islands and Liberia as these countries offer incentives for ship and boat owners who register under their liberal “flags of convenience”. Liberia claims to have 4,400 vessels, or 12% of the world’s oceangoing fleet, in its registry, which is headquartered in Virginia, in the US. However, few benefits flow through to the Liberian people or the economy, which continues to be vulnerable to external shocks, and whose infrastructure deficit continues to constrain development.
Economic growth in Nigeria, the most populous country in Africa, remains slow and way off the overly-optimistic expectations of its 2017 economic recovery and growth plan. The country, which is negotiating World Bank funding in the region of US$2.5bn, the second tranche in as many years, remains highly dependent on agriculture and oil, which played into its languid GDP growth of 1.94% in the quarter to June, from 2.1% and 2.46% in the previous two quarters. The growth plan had projected 4.5% growth in 2019. The oil sector, which accounts for 10% of economic output, grew 5.15% in the quarter to June, while the non-oil sector expanded by just 1.64%. According to the World Bank, Nigerian GDP averaged 5.7% between 2006 and 2016, starting the decade at 8% on the back of high oil prices and ending it at a low of -1.5% in 2016. Nigeria emerged from recession in 2017, with a growth rate of 0.8%, and growth reached 1.9% in 2018. The country remains at the mercy of oil prices, climate and conflict, and investors, including South African companies such as MTN and Shoprite, have found conditions in Nigeria difficult. This is not a new phenomenon. Woolworths announced the closure of its three stores in 2013. Tiger Brands sold its interest in its Nigerian flour division in 2016 after writing down R2.7bn on the investment, although it retains 49% of FMCG company UAC Foods and 100% of biscuit maker Deli Foods. Recently, following xenophobic attacks, Nigeria announced it had recalled its ambassador and pulled out of the World Economic Forum meeting on Africa in Cape Town, while companies such as MTN and Shoprite (which has 25 stores) were forced to close stores in Nigeria after they were attacked in the backlash. Even without these challenges, foreign exchange, regulatory, logistics and supply issues continue to hamper investors’ ability to operate and grow in Nigeria. The World Bank expects economic growth just above 2% in 2019 and over the medium term, with a stagnant oil sector in the face of regulatory uncertainty. The African Development Bank expects 2.3% growth in 2019 and 2.4% in 2020 as the country’s economic recovery and growth plan gains pace. The United Nations expects Nigeria’s population to double to 410 million by 2050 and president Muhammadu Buhari, who was re-elected in February, has a tough task keeping his promise to lift 100 million people out of poverty over the next 10 years. He has appointed a new team of economic advisors, including economics professor Doyin Salami, who is on the central bank’s monetary policy team and former central bank governor Charles Soludo, to help him. But the economy remains sluggish, inhospitable to investors and beleaguered by debt.
There are causes for optimism about Mozambique’s political and economic future due partly to a recent peace accord with opposition Renamo ahead of the country’s October election and partly to the announcement of several major projects following the discovery of huge deposits of natural gas. African Development Bank figures show Mozambique’s GDP growth was 3.5% in 2018, down sharply from the average of 7% from 2004 to 2015, mainly because of the steep decline in public and foreign investment. Mozambique has a debt crisis and it remains in debt default after the 2016 discovery of US$2bn (13% of GDP) of questionable government-guaranteed debt. The minister of Economy and Finance, Adriano Maleiane said recently that the budget deficit will be 8.9% in 2019. The growth outlook varies widely. Some commentators expect GDP growth of less than 1% in 2019 due to the devastating impact of cyclones Idai and Kenneth and widening fiscal and current account deficits due to reconstruction costs from the storms. The AfDB expects growth of 4.5% in 2019 and 5.0% in 2020 driven by a recovering agriculture sector, extractive industries and coal exports. Mozambique’s economic prospects hinge largely on major projects in the Rovuma Basin, where huge natural gas reserves were discovered. A Whom Owns Whom report on The Mozambican Petroleum Industry indicated that the 35 trillion cubic metres of natural gas deposits in the Rovuma area could put the country among the 10 largest liquefied natural gas producers over the next few years. The report, quoting an International Monetary Fund June 2019 update, said Mozambique’s economic situation had been improving following a drop in inflation (from 26% in November 2016, to 3% in April 2019) and the further development of gas projects, until cyclones Idai and Kenneth hit. The Mozambican economy is characterised by a lack of diversity, with the agriculture sector, which was devastated by the cyclones and their aftermath, accounting for about 30% of GDP and around 80% of the country’s labour force, according to the Who Owns Whom report. Mozambique is also affected by corruption, poor governance, bureaucracy, the weak rule of law and an underdeveloped financial sector that makes it difficult to access finance. Companies contend with a shortage of skilled labour and state-sanctioned monopolies. However, gas investment will bring opportunities. Major investments include Anadarko and partners’ US$25bn in the Rovuma liquefied natural gas project and ExxonMobil, Eni, China National Petroleum and partners’ development of a US$27bn to US$32bn project. Eni and ExxonMobil have a second US19bn project under development, while Eni operates another US$8bn project and Shell has completed a feasibility study for a US$5bn gas to liquids plant. The economy, meanwhile remains susceptible to downside risks. The African Development Bank said these include debt distress, rising prices for key imports such as fuel and food, economic difficulties in South Africa, Mozambique’s second largest export destination, and natural disasters.
Zambia’s economy is holding steady despite the massive drop in agricultural output in 2018. But political and economic challenges weigh heavily on the country. World Bank figures estimated Zambia’s 2018 GDP growth at 3.5% while the African Development Bank estimated economic growth at 4.0% in 2018, compared with 4.1% in 2017. It said that agricultural output fell more than 35% in 2018 due to poor rainfall, although copper production and construction contributed positively to growth. The World Bank expects the Zambian economy to grow 2.5% in 2019 and 2.8% in 2020. Finance minister Bwalya Ng’andu, a recent replacement of Margaret Mwanakatwe, who was unexpectedly fired, reduced the country’s growth outlook for 2019 to 2.5% from an initial estimate of almost 4%. Since president Edgar Lungu came into power in 2015, many Zambians have been unhappy about increasing corruption and fiscal and political challenges which have seen some ministers resign and a number of opposition leaders being imprisoned. Britain’s outgoing ambassador recently slammed the country’s rampant corruption and fraud, saying it had led to withholding of aid and investment. The economy, which is heavily reliant on copper mining and agriculture, is vulnerable to variations in the copper price, and to drought, according to a Who Owns Whom report on the agri-business sector. The report said that economic growth was mostly due to growth in the services and mining sectors that offset a contraction in the agricultural sector as a result of low rainfall. The World Bank said in its April 2019 Macro Poverty Outlook report that the GDP of Zambia’s agricultural sector decreased in real terms by an estimated 6.5% in 2018, after achieving a growth rate of 16.5% in 2017. The Who Owns Whom report indicated that maize production dropped by 33.6% in the 2017/2018 season on the back of a 15.3% reduction in the area planted, and a 21.5% drop in maize yields, caused by prolonged dry spells. Investors have been having difficulty in Zambia. Vedanta Resources got a South African court order blocking the liquidation of its Zambian-based Konkola Copper Mines in an ongoing battle with the government, which has claimed that Vendata abused its mining licence and was shifting profits. Zambia is 118th out of 140 countries in world competitiveness and scored poorly in measures of human development. Ng’andu pointed out that resources are largely being deployed to service debt. This will likely see it continuing to find it difficult to develop infrastructure and to attract investment. It is widely acknowledged that a substantial portion of Zambia’s external debt, believed to have totalled $10bn at the end of 2018, is owed to China, and a number of reports express fear that Zambia is in negotiations to or is expected to hand over national assets such as electricity producer Zesco, Lusaka’s airport and mines, including Vendata’s, to China and increasingly fall under its control. The Economics Association of Zambia said recently that Zambia’s debt to China was US$3.1bn, a third of the US$9.51bn external debt the country had in the third quarter of last year. China is already a major provider of development finance and has invested in water, milling, mining, broadcasting and cement projects and companies,