TechInAfrica — According to a report from The Institute of Chartered Accountants in England and Wales, ICAEW on “In Economic Insight: Africa Q3 2018”, most of the African countries have now shown a positive view on economic sector regardless its economy slowing down.
Based on the report, with a GDP forecast at 6.3%, East Africa emerges as the best performance in the continent. The positive result is in consequence of its economic diversification and investment-driven development. As East Africa’s powerhouse, Ethiopia emerges with a growth outlook at 8.1% under the new leader, Prime Minister Abiy Ahmed.
Meanwhile, in Central and West Africa, the growth forecast is at 2.9% which due to its subdued non-oil economy activity of Nigeria as the region’s powerhouse. In contrary, Ghana emerges with its best surprising performance in the region with 6.5 of growth forecast.
The ICAEW Middle East, Africa, and South Asia, Michael Armstrong stated that even though African countries recently have shown growth slump, most of them project a positive economic viewpoint shown by remittance income that is expected to be the main economic stimulant in the upcoming months.
In the franc zone, the economic growth forecast at 4.6% which driven by Ivory Coast which comes as the region’s main economy. Ivory Coast is mostly driven by investment that brings a rapid expansion to the country. It boosts approximately 7.4% of the region’s economy.
In North Africa, as a result of its structural and policy reform that boosts investment and manufacturing, Egypt is forecast at 5.3%. The reform in the country also brings a positive impact on its tourism sector. In the other hands, Libya’s growth is forecast at 16.5% which comes from improvements in the oil production sector.
In Southern Africa that mostly affected by constant slow growth, South Africa emerges with growth forecast at 1.5% which also the same forecast result with Angola. Becoming the powerhouses of the region, Botswana and Zambia emerge as the strongest economic growth in the region. However, it does not affect much on the region’s overall performance.
The report mentions remittance income as the main economic factor for most African countries. Nigeria came as the biggest receiver of remittance on the continent while the West African economic powerhouse received 29% of total remittance on the continent in 2017. The remittance flowing mostly coming from the Gulf, Great Britain, and the U.S.
Coming as the second biggest remittance receiver, Egypt received $20 million of remittance. On the other hand, remittance flows continuously play a key role in Ghana, speaking of external accounts. Based on the World Bank’s report, remittance inflow amounted to $2.5 billion in 2014 which is equal to approximately 18.6 of total exports in the year. Unfortunately, in 2017 the remittance inflows weaken to $2.2 billion—15.8% of exports.
Despite the decline of remittance inflows in most African countries in 2017, Uganda’s economic growth reportedly have recovered significantly last year. This year, it is expected to have a surplus of approximately 5.6% of GDP with a support from project aid and remittance inflows.
The report concludes that even though remittances play the biggest role in the continent’s economic growth, there should be policies that can focus on lowering the cost of remitting fees.