The Farmers Gazette | Page 23

Hold on to your hats – Next year will be a rocky ride for Africa By Dianna Games C HINA’S recent promise to deepen partnerships with African countries and provide $60bn over three years to address constraints to development, was good news for a continent facing many headwinds as it rushes headlong into 2016. Ironically, China’s slowdown is one of those headwinds. But there are many other issues that will make next year a difficult one for subSaharan Africa. The continent’s petro-states have slashed budgets and put infrastructure projects on hold as budgets dry up, but they continue to reel from the effect of low oil prices. Any hopes that this was just a brief cyclical blip have been dashed by the fact that 18 months since the oil price plunged, there is no sign of an upturn. Oil industry executives speaking at the Africa Oil Week conference earlier this year confirmed the view that the "world of $50 oil" isn’t going to change anytime soon. At the same event last year, oil majors flagged ambitious exploration projects and mentioned the billions of dollars lined up for Africa’s oil and gas assets. This year, the broad narrative focused on project pullbacks and how to negotiate this long, rocky road. Oil is just part of the problem. Lower commodity prices in general signal that next year is going to be difficult for Africa. Buffeted by global developments and internal weakness, currencies in Africa have lost significant value. Angola’s kwanza, Zambia’s kwacha and Nigeria’s naira are among the main casualties. South Africa has not fared well either. Fitch Ratings has predicted that emerging markets will face another wave of ratings downgrades next year. The benefits of lower oil prices for non-oil producers have not been realised in many cases. Zambia, for example, is looking at growth rates of less than 4% and a widening trade deficit. Despite this, there is little political leadership in addressing the looming macroeconomic and social crises. South Africa, like many other African states, is facing the challenge of rising debt. The resort by a number of African economies to issue Eurobonds to fill fiscal voids is coming back to bite them. Ghana and Zambia have already turned to the International Monetary Fund (IMF) for FARMERS GAZETTE November 2015 21