Election-related uncertainty a great obstacle to African economies – report
London, Dec. 17, 2018 (AltAfrica)-Political instability tends to peak around election time for most African nations, which affects economic growth, according to a recent report
“This scenario tends to dampen the GDP growth of some countries since economic growth shares a complex relationship with both elections and accompanying political instability,” according to the report published by Xinhua.
The report, commissioned by the Institute of Chartered Accountants in England and Wales (ICAEW) and produced by partner and forecaster Oxford Economics, provides a snapshot of the region’s economic performance and the overbearing influence of politics, particularly at election time on economic matters
The report says most African countries have a positive economic outlook, apart from those with upcoming elections.
According to the report, East Africa continues to report the highest GDP growth on the continent even though the region’s economic growth is expected to ease slightly, from 6.8 per cent in 2017 to 6.3 per cent this year. Ethiopia reported the highest forecast at 7.8 per cent, while the lowest forecast for the region was at 3.8 per cent by war-torn South Sudan.
Lower growth ranking for some of the biggest economies in the continent demonstrates how large an effect political instability can have on economic prospects, the report said.
For example, In the poll taken in the past week for Reuters , analysts and economists’ forecasts showed a median of 2.1 percent growth for Nigeria, accelerating to 3.0 percent next year.
That was a significant downgrade from the previous poll taken three months ago, which showed Africa’s largest economy expanding 2.6 percent this year after a lacklustre 0.8 percent in 2017.
“Upcoming elections and the associated high-wire politics already underway would instigate caution on the part of economic stakeholders,” said Rafiq Raji, chief economist at Macroafricaintel in Lagos, told Reuters that he expects the economy to slow in the next few quarters.
“Business and investment decisions are thus likely to be postponed till after the 2019 elections,” he added.
In contrast, Kenya’s growth rebounded to 5.4 per cent this year after it dropped to 4.9 per cent in 2017. The drop was attributed to political uncertainty during last year’s elections.
In the Democratic Republic of the Congo, where elections will be held in December, political tensions could rise and remain the main obstacle to the GDP growth forecast of 4.1 per cent this year.
The elections narrative is also seen in Southern Africa, being the slowest region with GDP forecast set to expand only by 1.2 per cent.
Election rhetoric regarding land and property rights in South Africa ahead of polls in 2019 has frightened investors, the report said.
The country is expected to post GDP growth of just 0.7 per cent, according to the report.
Meanwhile, the Zimbabwean government is suffering from post-election credibility difficulties, with international lenders and investors unconvinced that the scenario has improved in Harare — after violence and fraud allegations marred July’s election.
Egypt, which held elections in March to overwhelmingly return President Abdel Fattah al-Sisi to power, is expected to grow by 5.3 per cent this year.
The certainty of Sisi’s grip on power appears to be helping the country’s economic rebound, the report said Xinhua