Growth in Africa has outpaced most emerging markets in recent years, but that’s changing fast as a slew of problems beset its leading economies, Reuters reported.
Here’s what you need to know about sub-Saharan Africa’s big four:
South Africa: The prospects for Africa’s most advanced economy are not looking good. The country is set to grow by just 0.6% this year, according to the International Monetary Fund.
The rand plummeted 30% last year, and not just because of an emerging market sell-off. Political turmoil has also had a big impact. The rand has steadied this year, rallying by about 7%. But the country is on the brink of a ratings downgrade that would plunge its sovereign debt into junk status.
Nigeria: Africa’s largest economy is buckling under the low oil price. Nigeria relies on oil for 70% of government revenue and accounts for 90% of export revenue. That leaves very little room to adjust the country’s budget. The West African nation is expected to clock in growth of 2.3%, the lowest rate in 15 years, according to the IMF. It’s facing a shortfall of $11 billion in its 2016 budget.
Angola: What was once one of Africa’s fastest growing economies is now on its knees and asking for help from the IMF. Angola is Africa’s second largest oil producer and relies on oil for 95% of government revenue. The country is set to grow by 3.5% this year, down from 6.8% in 2013, according to the IMF.
Kenya: Kenya’s economy is more resilient and diversified but there’s trouble brewing in its banking sector. Three banks are being wound down by the central bank. Two of the banks failed last year, and a third was forced into the arms of the lender of last resort this month. A fourth bank is being investigated, and analysts believe consolidation in the industry is inevitable. The IMF has just cut its forecast to 6% for 2016, down from 6.8% previously.
