The African continental free trade agreement ACFTA has opened up opportunities for multinationals to diversify into unchartered markets especially emerging economies like Angola, Ethiopia, Kenya, Nigeria, South Africa, and Rwanda.
According to the International Monetary Fund, Angola’s economy will contract for a fourth straight year in 2019 yet investors are happy with the reforms by its central bank especially the devaluation of the Angolan Kwanza by 32% against the US Dollar. This has led to the ease of foreign exchange shortages that were crippling businesses since the fall of crude oil prices five years ago.
Ethiopia is the fastest growing economy in the world but the inflation rate has increased by over 20% with shortages of foreign exchange. The Nobel peace prize winner for 2019 and Prime Minister of Ethiopia Abiy Ahmed recently secured a three-year loan of US$2.9 billion from the IMF to enable the state-run economy to open up to international investors. The Ethiopian central bank is currently evaluating the overvalued Ethiopian currency, the Birr and Investors see this move as the most progressive in Africa.
The growth rate for Kenya in 2020 is forecasted to be 5.8% making it one of the continents best-performing economies on a long term while Nigeria’s foreign reserves dropped by 14% since July, yet the Naira remains stable said the Central Bank Godwin Emefiele and its economy remains one of the best for trade.
South Africa has seen investors pull out about US$10 billion from the stock exchange amid fears of the crisis at power utility ESKOM and a worrying sign that rating agency Moody’s might cut the country’s investment grade to junk. However, investors will be quick to return as soon as reforms in the Power sector yield positives while the East African state of Rwanda has one of the continent’s fastest-growing economies which is expected to grow by 8.5% this year.
By Abiodun Abidoye
Member Southern African Freelancers Association