According to the Reuters poll, Nigeria and South Africa, Africa’s two giant economies have emerged from recession in the second quarter, however, the region requires more business to stimulate growth. The growth couldn’t be seen until and unless business confidence and faith is restored. This is the result of recovery in the commodity prices, initiated since early 2016. China, Euro zone and the United States, the primary trading partners of the two African economies have got huge benefits out of this recovery.
Aly-Khan Satchu, the CEO of Rich Management in Nairobi insisted that though, these African economies have stepped out of recession, but in order to achieve economic stability, Nigeria needs to adopt single FX policy, whereas South Africa needs emphasize on policy certainty.
The Reuters poll depicted the breakout of the Nigerian economy out of a long trail of devaluation in the second quarter, with a median forecast for 1.55% year-on-year growth, while South Africa prospered with 2.2% quarter-on-quarter growth.
Razia Khan, head of Africa research at Standard Chartered expressed the expectations for a recovery in oil production and improved foreign exchange availability. Nigeria has undergone the shortage of dollar, along with the rapid collapse in commodity prices. To overcome the shortage of dollar, the Nigerian Central Bank has injected the dollars into the market, to bridge the gap between the black market and official prices, not allowing the Naira to float.
Khan further said that “recovery in manufacturing in the second quarter should help drive a quarter-on-quarter acceleration, but growth is expected to remain weak overall”. He suggested that the agricultural sector should uplift the growth, but growth in other sectors could only be accelerated after the confidence is restored. Till that time, the growth will be negligible.
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