By Vuyani Ndaba

JOHANNESBURG – A weakening of local currencies will prevent sub-Saharan Africa from gaining momentum in the recovery, according to Reuters poll. This was revealed by a Reuters poll on Thursday.

As some of Africa’s largest economies (Angola, Ghana, and Nigeria) borrow mainly in dollars to weak currencies, there is little chance that gross domestic product will grow enough to reduce overblown budgets.

A poll of analysts and economists was conducted April 19-25. The median projections suggested that Nigeria’s largest economy would see 3.1% and 3.2% growth next year.

Nigeria’s statistics agency, despite slight declines in fourth quarter growth due to oil sector problems, reported the fastest growth in 7 years two months ago. Last year’s full-year growth rate was 3.4%, the fastest since 2014.

Capital Economics noted in a memo that recovery efforts across sub-Saharan Africa had been “underwhelming.”

Referring to Nigeria, it said that “we doubt that higher export earnings will prompt policymakers t o remove draconian forex restrictions that are hindering activities and driving up inflation.”

David Cowan, Citi, wrote that elections were scheduled for 2023 against the backdrop of an extremely high oil price in 2022. The focus should be on politics and not economic reform.

Both Ghana’s and Kenya’s economies are expected to grow at 5.0% and 5.1% respectively this year. This is in line with the World Bank’s estimates. Ghana’s debt management issues are still a problem.

Both Ghana and Kenya were forecast to see growth of 5.5% and 5.1% respectively next year.

The country’s statistic agency reported last week that Ghana’s economy increased 5.4% by 2021. It is an improvement from the COVID-19 crisis lows, but still within the growth forecasts.

The West African country saw an increase of 7% in its gross domestic product over the fourth quarter. This was largely due to higher agricultural production, even though the industrial sector declined.

According to the World Bank the sub-Saharan Africa economic growth was expected to be 3.6% this year, compared with 4.0% in 2021. The Bank also stated that Russia’s invasion of Ukraine has fueled rising food and energy costs which could lead civil unrest.

Capital Economics said that there would be a variety of effects on Africa from spillovers caused by the conflict in Ukraine. Angola will be able to take advantage of high oil prices, and Nigeria in a less significant way, which should enable them to adopt a looser fiscal policy.

After World Bank’s 0.4% estimate last year, the poll predicts Angola will grow by 2.8% in 2012.

An earlier poll found that South Africa’s second-largest economy was likely to see a slowing of growth to 1.9% in 2018, after a 4.9% increase last year. The forecast growth was 1.8% in 2012. [ECILT/ZA]

Higher commodity prices and higher rand rates have had an impact on the budget. In recent months, these currencies have strengthened.

More than half the sub-Saharan African economy is made up of Nigeria, South Africa, and Angola.

(For more stories, see the Reuters Global Long-Term Economic Outlook Polls Package)