With Nigeria expected to retake the top position in the GDP rankings, there is no shortage of talking points this week. The Nigerian property sector though fetching lower yields is still attracting investors who expect brighter days ahead. Down in Zambia, fuel prices have been hiked as a result of government’s decision to stop subsidising fuel in the country. Meanwhile, Zimbabwe’s energy sector has also experienced shockwaves after the power utility company was given an ultimatum to pay up its debts. What is the talking point of the week is the chance at $1 million capital offered by Chivas Regal for socially aware start-ups. Read on for more details.
Nigerian economy set to retake top spot in Africa
Nigeria is set to return to the pinnacle of the biggest economies list after a brief stint on second position to South Africa. In its latest report, the IMF projected that Nigeria’s Gross Domestic Product would hit $415.08bn at the end of this year, from $493.831bn, its value at the end of 2015 whereas South Africa’s GDP is expected to be $280.367bn from $314.732. The IMF however painted a morbid picture for Africa’s biggest economies saying, “…the largest economies in sub-Saharan Africa (Nigeria, South Africa and Angola) are experiencing sharp slowdowns or recessions as lower commodity prices interact with difficult domestic political and economic conditions.”
In its ‘World Economic Outlook October 2016: Subdued Demand, Symptoms and Remedies’ Report, the IMF added, “Activity weakened in sub-Saharan Africa, led by Nigeria, where (oil) production was disrupted by shortages of foreign exchange, militant activity in the Niger Delta, and electricity blackouts. Momentum in South Africa was flat, despite the improvements in the external environment, notably stabilisation in China. Elsewhere, resilience in Côte d’Ivoire, Kenya, Senegal and Tanzania partially offset generally softer activity across the region.”
However, Mr. Ayodeji Ebo, an analyst at Afrinvest West Africa, told Punch he doubted if the IMF’s forecast would come to pass.
He said, “Are we going to record increase in economic activities, consumer spending, manufacturing and production activities and increased demand between now and end of the year? I doubt if this will happen between now and year end.”
Nigeria continues to attract investment, however subdued the rates are now. The property crash in the country has been said to raise risks but will potentially have high yields when the economy recovers.
Zimbabwe finally clears IMF Arrears
Zimbabwe is finally current on its 16 year IMF debt after settling its arrears of around $107.9 million. IMF Director of Communications on Friday released a statement that Zimbabwe had settled its arrears on Thursday. He said, “On October 20, 2016, Zimbabwe settled its overdue financial obligations to the Poverty Reduction and Growth Trust of the IMF. Zimbabwe had been in continuous arrears since 2001.”
The clearance is in line with the country’s arrears clearance strategy with multilateral institutions so as to facilitate for re-engagement and financial support talks to begin. Gerry Rice also provided details of the settlement adding, ““To settle these obligations, which amounted to SDR 78.3 million (about $107.9m), Zimbabwe transferred part of its SDR holdings kept at the IMF to the PRGT account. Zimbabwe is now current on all its financial obligations to the IMF.”
Zimbabwe still owes the African Development Bank ($601m) and World Bank ($1.15 billion).
Meanwhile, Zimbabwe’s power utility company ZESA Holdings has been given a two month notice to settle its debts with South Africa’s Eskom and Mozambique’s HCB. The company owes the two a combined $27 million. ZESA Holdings has been negatively affected by local consumers who have no less than $1 billion in arrears, in particular, State entities.
Fuel prices go up in Zambia
Zambian fuel prices were hiked by more than 30% which the citizens did not take too well. The Lusaka Times reports that , “On Friday, ERB vice board chairman Professor Francis Yamba announced that in line with the policy decision to remove fuel subsidies and the current policy direction to migrate to cost reflective pricing of energy services and products, it was decided to raise the price of fuel.” Former Vice President Enoch Kavindela has said the hike is likely to help the country save no less than $1 billion in fuel subsidies which helped the rich more than they did the poor. He said, “This will benefit the economy since the money being saved can go into other development efforts of government.” Kavindela further suggested that the country stop buying fuel for government officials.
Opportunity Alert: Start-up capital up for grabs
Chivas Regal’s The Venture is back for another installment as $1 million dollars are up for grabs in the competition. The Venture is open to 32 countries, two of which are Uganda and Kenya. Social entrepreneurs aged twenty-five and above have a rare chance to be mentored and to get a capital boost to their start-up plans. The deadline for submissions is November 30, after which the top 10 finalists will be coached by a group of business experts who will then select the entrepreneur who will represent their country on the world stage. The most promising candidate from each country will attend The Venture's Accelerator Week programme in the UK in March 2017 for intense mentorship, pitching support and business master classes. The East African says, “The social entrepreneurship movement uses business concepts, technology and innovative products to create solutions that benefit many people, particularly those in the periphery of society.” More and more ideas are being adopted to appreciate the social value of business in Africa.