Connect with us

Business News

All eyes on South Africa and Nigeria ahead of World Economic Forum3 minutes read

The discussions will focus on how Africa can expand its potential

Published

on

All eyes on South Africa and Nigeria ahead of World Economic Forum

South Africa and Nigeria account for almost half of sub-Saharan Africa’s gross domestic product and are proving to be a damper on the region’s economic expansion.

Nigeria and South Africa, which vie with each other to be the continent’s biggest economy, both released second-quarter growth data on Tuesday.

While the figures will probably show South Africa dodged a recession and Nigeria’s growth quickened, according to two separate Bloomberg surveys, both are expected to show they expanded at a limp pace.

The publication of the data comes as political and business leaders from at least 28 African countries prepare to meet in Cape Town on Wednesday at the World Economic Forum on Africa.

The discussions will focus on how Africa, which has some of the world’s fastest-growing economies in Ghana and Ethiopia, can expand its potential.

“It is obviously going to be a major drag on the continent’s growth if the two largest economies are not performing,” said Ronak Gopaldas, a director at the Cape Town-based consultancy Signal Risk.

The data is expected to show the South African economy grew an annualized 2.5 per cent from the first quarter, and Nigeria’s expanded by the same margin year-on-year.

While the slowing global expansion is contributing to South Africa and Nigeria’s tepid growth, the two nations’ economic woes are largely of their own doing.

The African National Congress-led government in South Africa has failed to decisively deal with the finances of debt-laden power utility Eskom, which is straining the nation’s budget and caused a contraction in GDP in the first quarter.

Nigeria’s failure to diversify its economy, which relies on oil for 90% of its foreign exchange, leaves it vulnerable to international price movements.

“Investor confidence and sentiment towards both of these economies is weak at the moment and that’s largely self-inflicted,” said Gopaldas.

“Both countries, through their policy-making own goals, have made bad situations worse than they needed to be.”

South African President Cyril Ramaphosa is facing criticism from business and investors for the slow implementation of reforms, while proposals published by the National Treasury last week to revive the economy have been shot down by the country’s biggest labour-union federation.

Similarly, a lack of policy progress since Nigerian President Muhammadu Buhari was re-elected in February has frustrated investors in Nigeria and the recent blurring of lines between monetary and fiscal policy to stabilize the naira added to that, said Celeste Fauconnier, an analyst at Johannesburg-based Rand Merchant Bank, a unit of FirstRand.

Among the solutions likely to be touted at the WEF as a panacea for accelerated growth is the African Continental Free Trade Area.

An accord on the area, signed in July, will cover the entire continent and will be the world’s largest free-trade zone once it’s fully operational.

“South Africa stands to benefit far more from the African Continental Free Trade Area,” according to Finance Minister, Tito Mboweni.

“We stand to gain tremendously from this because of our industrial base.”

Copyright News Central

All rights reserved. This post and other digital content on this website may not be reproduced, published, broadcasted, rewritten or redistributed in whole or in part without prior express written permission from News Central.

Tell your story the right way

Have you witnessed a news worthy event? Want to become our citizen journalist and tell your own stories?

Send your stories to us or contact us via:
Email: Click to email us
Social media: Twitter and Facebook @NewsCentralTV
WhatsApp: Text or call +234 901 190 0000 .

New stories delivered to your phone

Click here to have news stories delivered to your phone or mail. You can also share your stories with us. Join our mailing list here.

Continue Reading
Click to comment

Leave a Reply

Business News

South Africa Unions Reject Government Plan to Review Pay

Published

on

The South African labour unions have rejected a government proposal to review planned increases for civil servants days before they were due to be implemented.


The Public Servants Association, which represents 230,000 government workers, says the state has asked to review the last leg of a three-year pay agreement because it couldn’t afford it.


The Public Servants Association says the timing of the proposal, a few days before the adjustments were due to be implemented, speaks of a government that regards public servants as an easy target to resolve its financial woes.


The Central Executive Committee of the Congress of South African Trade Unions, the country’s biggest labor federation, says if the proposal made its way into the budget speech it will be seen as a declaration of war.

Copyright News Central

All rights reserved. This post and other digital content on this website may not be reproduced, published, broadcasted, rewritten or redistributed in whole or in part without prior express written permission from News Central.

Tell your story the right way

Have you witnessed a news worthy event? Want to become our citizen journalist and tell your own stories?

Send your stories to us or contact us via:
Email: Click to email us
Social media: Twitter and Facebook @NewsCentralTV
WhatsApp: Text or call +234 901 190 0000 .

New stories delivered to your phone

Click here to have news stories delivered to your phone or mail. You can also share your stories with us. Join our mailing list here.

Continue Reading

Business News

South Africa Raises $1.1 Billion Bailout for Ailing Airways

Published

on

South Africa has almost doubled its funding for the national airline to 16.4 billion rand ($1.1 billion), cash which will go towards supporting a restructuring plan for the almost insolvent carrier.


The bailout will be used to service and pay debt previously guaranteed by the state over the “medium term,” according to the country’s Finance Minister, Tito Mboweni.


This amount compares with 9.2 billion rand earmarked for South African Airways in October.


SAA has been a drain on the National Treasury for several years racking up losses of more than R32 billion over the past decade.
Late last year, the government placed the airline on a local form of bankruptcy protection, and administrators have set about reducing costs by closing routes and considering asset sale.
However, the Finance Minister has often stated his reluctance to support SAA while faced with bigger problems such as the $30 billion of debt owed by state-owned power utility Eskom Holdings.


In addition to Treasury funds, SAA was last month, given access to R3.5 billion from the state-owned Development Bank of Southern Africa.

Copyright News Central

All rights reserved. This post and other digital content on this website may not be reproduced, published, broadcasted, rewritten or redistributed in whole or in part without prior express written permission from News Central.

Tell your story the right way

Have you witnessed a news worthy event? Want to become our citizen journalist and tell your own stories?

Send your stories to us or contact us via:
Email: Click to email us
Social media: Twitter and Facebook @NewsCentralTV
WhatsApp: Text or call +234 901 190 0000 .

New stories delivered to your phone

Click here to have news stories delivered to your phone or mail. You can also share your stories with us. Join our mailing list here.

Continue Reading

Business News

South Africa to Establish $2 Billion Sovereign Wealth Fund

Published

on

South Africa has announced that it will use money from the sale of broadband spectrum and mining royalties to establish a 30 billion-rand ($2 billion) sovereign wealth fund, according to the country’s Finance Minister,Tito Mboweni.


Its establishment was first mooted at least 10 years ago.
The proposed fund comes at a time when Africa’s most industrialised economy is struggling to contain rising debt amid sluggish economic growth and a budget deficit projected to widen to a near three-decade high of 6.8% in the coming fiscal year.


Mboweni says the legislative framework for the fund will be submitted to the parliament.


Funding will come from the government’s plans to sell broadband spectrum this year, along with royalties from petroleum, gas and mineral rights, as well as the sale of non-core assets, future surpluses and savings.


The government is also pressing ahead with plans to form a state bank that will operate as a retail financial institution premised on commercial principles, he said.


However, the Reserve Bank is yet to grant the proposed lender an operating license.

Copyright News Central

All rights reserved. This post and other digital content on this website may not be reproduced, published, broadcasted, rewritten or redistributed in whole or in part without prior express written permission from News Central.

Tell your story the right way

Have you witnessed a news worthy event? Want to become our citizen journalist and tell your own stories?

Send your stories to us or contact us via:
Email: Click to email us
Social media: Twitter and Facebook @NewsCentralTV
WhatsApp: Text or call +234 901 190 0000 .

New stories delivered to your phone

Click here to have news stories delivered to your phone or mail. You can also share your stories with us. Join our mailing list here.

Continue Reading

Trending