In certain places in Africa, doing business is becoming harder, according to a number of banks and credit guarantee bureaus operating in Africa. Many of countries have seen a deterioration in credit metrics – credit ratings and economic growth have been falling, and interest rates have been rising. Countries most affected have typically been those that rely heavily on revenues from the sale of commodities. While many prices have rebounded since the start of the year, they are still significantly lower than levels seen three years ago.
Nigeria is one of the countries facing increasingly tough times, as lower oil prices have drastically lowered revenues for oil producers and those involved in downstream and associated industries. This has now translated into adverse credit events that has forced Credit Guarantee to begin paying out claims.
Angola is another country experiencing tough times – GDP will fall below 1% p.a. this year and foreign currency is hard to come by, but there are also regional spikes in performance. Some parts of Angola are doing well. Southern Angola is experiencing strong trade with Namibia, thus the economic growth is stark contrast to the northern parts of the country.
While South Africa’s economy seems to be settling down, Africa as a whole is clearly volatile and could be in a state of flux for a number of months.