The year 2010 promises to be a better year for Africa and emerging markets in general. While the developed world saw their growth contract by 3.5 percent, the emerging markets still maintained 2 percent growth. According to the Nomura forecast this means that there has been a 5% swing towards the developing world.
When trying to forecast 2010 for Africa one must remember that 4 countries make up 75 percent of Africa’s $1.7 trillion GDP.
South Africa ($463b), Egypt ($403b), Nigeria ($230b) and Algeria ($220b). So continental forecasts are heavily skewed towards those four, when predicting for our region we must take into account overall trends due to lack of data.
Analysts expect commodity prices to rise, this will be good for African countries that are increasingly reliant on minerals. Even commodities like coffee and tea will rise on the global market, the price of tea recently doubled at an auction in Mombasa.
Demand in energy will surely increase but the Wall street journal expects oil prices to stabilise at $72 - $75 a barrel. This will be driven by demand in China and India but a commitment to change to greener fuels in the west will check the growth.
While other economic indicators are strong overall, inflation has been controlled, public spending reduced and the fallout from bad debt was not as bad as anticipated.
It is the realm of employment that we will see continued slow growth, employers have at least stopped job cuts for now.
This crisis has showed us that employment is the be-all and end-all of economic management. Jobs must be protected at all costs, the only true economic indicator that matters is employment.
Governments will see lower tax revenues due to fewer workers on the payroll, companies then post lower profits and the vicious circle continues.
Regionally there will be growth in sectors that are logistically integrated and can take advantage of the wider market.
The service sector is particularly vibrant and will benefit from faster internet speeds promised by the new sea-cable. The East Africa manufacturing sector will continue to struggle due to inefficiency, lack of investment, high energy costs, logistical pressures and cheap imports.
The customs union will begin to facilitate the EA manufacturing sector and make it possible to integrate and reduce logistical pressures.
For Rwanda it is urgent that these logistical pressures are reduced, this requires removal of trade barriers and higher investment in road maintenance, rail and air travel.
Within our economy, we can expect more growth in certain targeted sectors. Banking will see growth as targeted credit is released to strategic sectors such as construction, transport, and retail.
The private sector will still grow at a slower rate than we expect, the black economy still is a problem and we need to find a way to bring it on-stream.
The reforms undertaken recently will continue to provide growth. Legislation in consumer rights is expected in 2010, this ought to improve service and outlook.
We have nothing to fear but fear itself, this last year was psychologically daunting with regards to the economy. We can now look to the future knowing the world is in recovery.