The naira fell, so did the rand. Africa’s top two largest economies are not in good shape and in a way, they share the blame for their economies with plunging commodities prices. While the latest naira slump was due to the decision of Nigeria’s central bank to curtail dollar supply, South Africa’s rand latest plunge was due to President Jacob Zuma’s decision to sack the head of treasury who many see as the financial conscience of the nation and replace him with a David no one knew. Record high temperatures have hit Africa’s most advanced economy!
The condition of the two important African economies is making their citizens ask for removals not okay with their leaders. In Nigeria, a lot people are asking for the removal of subsidy, a request that does not go down well with President Muhammadu Buhari for now; while in South Africa, the removal the people want is the removal of Zuma. Over 100,000 persons have already signed a petition.
Much did not hit the headlines about Kenya’s shillings as there were more pressing questions than how the currency was doing. Kenyans wanted to know ‘who took the money‘. Of course, it can’t be Patrick Ngoroje. Remember the central bank governor is not impressed by money.
While Kenyans continue their search for the Eurobond proceeds, they need to spare some time to pray for fellow East African country Ethiopia whose economic growth over the past decade is being threatened by El Nino and terrorism. At least six people were injured when a hand grenade was thrown Friday at a mosque in the Ethiopian capital of Addis Ababa. The country is also facing its most sever drought in 30 years. It is, therefore, estimated that 400,000 children will face severe malnutrition in 2016 as part of the effects of extreme weather condition in the country.
The climate change conference in Paris is expected to end with a climate deal that will save countries like Ethiopia from future effects of human activities on the environment. The final draft of the agreement aimed to limit warming to well below 2C.
Already, Africa has gotten very good deals from the conference, most centered on renewable energy. As award-winning singer Akon, whose real name is Aliaune Damala Bouga Time Bongo Puru Nacka Lu Lu Lu Badara Akon Thiam, rightly pointed out: “renewable energy is in the same position now competing with the traditional way of energy”. The future may be bright for Africa, especially in terms of the effects it suffers, if the Paris agreement is adopted by most nations and are adhered to. But it may not be good news for countries like Nigeria whose major revenue source is oil.
The West African nation’s proposed budget for 2016 hinges on the hope that oil sells at $38 per barrel and it produces 2.2 million barrels of the black liquid daily. Both are not feasible. Oil already sells below $38 and the future doesn’t look any better for it, especially with OPEC’s position and now, near collapse.
While Nigeria struggles, South Africa may also find it hard to lead the continent as its economy does not fair better. Mining companies are struggling and South Africans are moving their assets abroad as rand’s tumbling continues and current account gap worsens. Hopefully, Cyril Ramaphosa will be able to save the country if he ever becomes president.
Economies may be struggling in the West, East and South, and leaders may not be putting any quick fix, things are not totally the same throughout Africa. In Egypt, the government is trying to make the lives of poorer people better with one million new homes. Good things are happening at other places too. A Malawi prison band may get a Grammy Award and Facebook is giving out $150,000 each to two African developers/entrepreneurs. Angola is trying to rebuild its elephant population … and US Republican presidential candidate, Ben Carson may be Kenyan. But that’s not why he’s coming to Africa; he’s coming to brush up his foreign policy skills.
No matter what happens to Africa’s top two economies in 2016, private equity will be there to save some, as a company with a fund of over $1 billion got the right adviser in former president of African Development Bank Donald Kaberuka. That’s a lot of money for a lot of investments and lots of jobs. Ramesh Caussy’s air purifying robot Diya One may get another investor.