Political uncertainty in many African countries facing elections this year, will pose a risk to investment sentiment about Africa.
Moreover, beyond this and internal challenges face by African states, external risks such the Sino-US trade conflict and weakening economic growth in China and the US, pose a MEDIUM economic threat to African economies.
Does Africa have the kind of leadership required to meet the threats posed by external events or will the next possible global downturn be Africa's doom?
2019 is set to be an important year for many African states as it marks a year where major economies such as South Africa and Nigeria (already took place) are going to the polls and other players like Namibia and Botswana are also posed for elections. The common thread in all these elections is that these countries have all face weak economic growth projections as structural impediments continue to cut away from potential growth.
While domestic factors such as political uncertainty, eroding institutional trust, especially in the ability of the state to provide policy certainty and sound implementation of policies that will ease the burden of doing business in many African states. Africa finds itself at the mercy of global events and shocks. Many economists and political risks analysts agree that this year may not look good for the global economy, which is experiencing slowing economic growth and a possibility of another global recession, just 11 years after the last global recession. Top 10 Global Risks
According to the British-based Economist Intelligence Unit
“concerns over slowing growth in key economies, including China and the EU, and the wider impact of the trade war between the US and China, the Economist Intelligence Unit expects global growth to decelerate from 2.9% in 2018 to 2.8% in 2019 and 2.6% in 2020.”
Chief among these risks is the on-going Sino-US trade conflict may lead to a full-blown trade war. This as the US moves ever so close to the 2020 elections and Trump, who is feeling the pressure to shore up his base by intensifying his fight with China in order to keep his 2016 election promise. Thus far the trade conflict has not only negatively affected these two superpowers but major steel exporting countries like South Africa have found themselves in the crossfire and higher tariffs of South African steel products are posed to cause job losses.
Another risk to the global economy but more relevant to Africa is the slowing Chinese economy. China has seen moderate economic growth of 6.5% and is poised to see slowing economic growth as it seeks to reform its economy but also faces mounting external economic challenges. The slowdown in China’s economy is poised to impact global demand for raw materials. African countries have long depended on Chinese demand to cover the gap left by slowing demand from traditional powers such as the EU and the US.
As Africa faces its own economic challenges, it will need to find new ways to ride the storm. It is only through strengthening and reform its internal economy, increasing intra-Africa trade and investment that Africa get better to insulate itself from the impacts of external risks posed by Sino-US trade conflict, weakening US economic growth, EU sovereign risk challenges, a messy Brexit and geopolitical conflict in the South China Sea region among other risks.
The question we must ask does Africa have the kind of leadership required to meet these complex challenges and if not, how do we cultivate it and make sure we put the right people?
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