ECONOMY CONTRACTING IN AFRICA

MBABANE - Despite the damage caused by COVID-19, Eswatini has been listed among African countries that have suffered moderate effects in terms of gross domestic product (GDP) contraction.

The African Development Bank Group (AfDB) reported that the country’s economy contracted by an estimated 3.2 per cent in the past year after growing by 2.2 per cent in 2019. Manufacturing declined sharply as export-oriented industries were constrained by temporary business closures, disruptions in global value chains, and weak demand. Construction dropped as the COVID–19 pandemic upended input supplies. Investment weakened, and consumption, a key driver of aggregate demand, retreated, crippling the performance of key services such as wholesale and retail, tourism and hospitality.

South Africa Finance Minister Tito Mboweni recently told the Rotary Africa Centennial International Conference that Eswatini, Ghana, Kenya, Angola and Egypt suffered moderate effects, with less than four per cent contraction. These countries, according to Mboweni, are expected to bounce back successful. South Africa, Zimbabwe, Lesotho and Algeria fall into severely affected countries. This is because they have experienced contractions of more than four per cent of GDP in 2020. Meanwhile, one of the continent’s heavyweights, Nigeria, saw a decline of 1.4 per cent in 2020. The latter is expected to grow at a modest 2.5 per cent this year.

Powerhouses

Neighbouring, South Africa, which is among Africa’s powerhouses, is expected to grow at 3.1 per cent. Kenya is expected to bounce back at eight per cent.The International Monetary Fund (IMF) indicates that the growth for Africa should be around 3.4 and 4 per cent this year and in 2022, respectively. According to Mboweni, One of Eswatini’s Southern African Development Community (SADC) counterparts, Zambia, is expected to grow by 0.6 per cent because of high inflation, low demand for copper, wide fiscal deficits, poor policy managements and unsustainable debt levels.“Kenya was highlighted as one of the countries to have a significant growth in 2021, which was credited to the Kenyan Government’s implementation of their economy recovery strategy.

They ensured that every step was taken to achieve the objects that they set,” reads the report. Mboweni claimed that the Kenyan’s execution of policies should teach other countries across the continent that if policies are followed through with, success can most definitely be achieved. “When there is poor policy formulation and poor policy implementation, the consequences thereafter are dire indeed,” he said. The global economy has been gravely affected by the COVID-19 pandemic. However, 2021 looks promising and the International Monetary Fund (IMF) indicates growth of around six per cent this year - reflecting a surprisingly rapid recovery, particularly in the advanced economies of the world.

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