Wednesday, 28 September 2016 08:11

Ghana up, but Zambia drops as African volatility is the order of the day

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Despite Africa’s obvious potential over the next 10-50 years, there is a high level of short-term economic volatility, says the latest Africa Prospects Indicator Report Despite Africa’s obvious potential over the next 10-50 years, there is a high level of short-term economic volatility, says the latest Africa Prospects Indicator Report
Africa must still be viewed as a long-term prospect and companies that enter its markets need the stamina to weather both good and bad market conditions. Global insights company Nielsen says this is vital because, despite the continent’s obvious potential over the next 10-50 years, it seems that investors have to a certain degree been seduced by short-term numbers. The third edition of the Africa Prospects Indicator Report released yesterday (Tuesday), says 2016 is proving to be a year of volatility and change in the 26 African countries reviewed by Nielsen, with “a fair degree of re-forecasting” required by business as growth prospects ebb and flow. “This is apparent, given that six of the top nine countries have shifted in position over the past six months,” the report says. “These include Nigeria, which declined four places due to the rebasing of its currency and commodity price volatility; Zambia, largely due to a spike in its inflation over the last six months from 6% to 23%; and South Africa’s weaker position – as shown by it falling from seventh to eighth in the overall rankings.” On the positive side, Ivory Coast, Kenya and Tanzania maintained first, second and third place on the latest prospects ranking. The report says they currently provide more stable investment destinations than the larger economies of Nigeria, South Africa and Angola. Zambia plummeted from fourth to ninth position, with worsening consumer and retail indicators due to skyrocketing inflation, electricity shortages and a poor macro-economic environment which is heavily reliant on the resources sector. However, in Ghana there was a positive shift in prospects due to improvements in power supply, exchange rates and a stabilisation in inflation. With a stable growth outlook, business sentiment is at its most favourable levels since mid-2014.
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