At the end of 2015, Africa faced a number of daunting challenges due to, amongst others, the drop in commodity prices and the slowing down of the Chinese economy. Given that the majority of large commodity exporters in Africa had so far neglected to diversify their economies to reduce their dependence on oil and resources, Africa’s growth prospects for 2016 were a bit glum.

China is a major factor in Africa’s destiny and will remain so for a considerable period going into the future. On the one hand, the maturing/slowing Chinese economy will mean that the commodity prices will remain under pressure, which will put pressure on those African countries that have economies driven by commodity exports. Their currencies will remain under pressure, as will their balance of payments. On the other hand, China has undertaken to support African countries with beneficiation at the source. This should help Africa to diversify their economies away from oil and should make a contribution towards developing a manufacturing sector and industrialising sectors such as agriculture. In the short-term, it is expected that the negatives will be more prominent, until such a time that the positives from the structural adjustments kick in. China’s slowing economy can therefore actually be seen as a blessing in disguise. Fortunately for Africa, the economic benefits of the USA’s AGOA should help to alleviate the pressure brought about China’s economic woes.

On the note of commodities, it is generally expected that the price of oil will remain under pressure for the foreseeable future, as will the prices of commodities such as coal, iron, etc. This will maintain the pressure on African countries to reduce their dependence on commodity exports and to develop their manufacturing sectors. Given the Chinese undertaking to help Africa beneficiate at source, it is hoped that 2016 will see this phenomenon pick up and become much more pronounced.

Africa is looking forward to 10 presidential, general or parliamentary elections in 2016. Of the more prominent ones, we see Ghana, the DRC, Uganda, Niger and Somalia. In the DRC, President Joseph Kabila will probably stand for a third term, although his constitution does not provide for this. This will aggravate the instability in the DRC, which will increase the volatility in eastern DRC.  This situation will increase the political instability in the whole region. President Museveni in Uganda, who will be celebrating his 30th year as president of Uganda in 2016, will in all probability be re-elected as president in Uganda. In Ghana, the outcome of the general elections of 2016 is by no means as certain as the above 2 instances. Some analysts have predicted that President Mahama will lose the elections, given the economic and other problems that Ghana has been experiencing lately. Given that Ghana has been a model of political stability, even should he lose the election, it is not envisaged that it would create political instability.

Niger is the 4th largest uranium producer globally and has been an important player in the battle against Boko Haram. Any instability in Niger would therefore be detrimental to the efforts to put an end to Boko Haram. Unfortunately, it does seem that the elections might bring about this instability. Although Somalia has long been a hotbed of instability, it seems that lately many signs of improvement have become quite visible. The recently created National Consultative Forum is driving the elections, and in the process providing the required stability. It remains to be seen to what extent Al Shabaab will destabilise the country. A strong and unified government is crucial for any success against Al Shabaab.

Burundi had its presidential elections in 2015, but it is unfortunate that it seems to be sinking deeper into a spiral of violence and instability as internal groups rebel against President Pierre Nkurunziza’s third term. The AU seems adamant to send a peacekeeping force to Burundi. It is unlikely that Nkurunziza will use force to prevent this AU force from entering Burundi, in spite of his threat to do so. Whether he will step down is highly unlikely. The seeds of violence will therefore remain. In the African style of consensus, it is not unlikely that the different parties will create an agreement in which he will share government with the opposition parties. It is imperative that a solution be developed to create stability. Given the instability in eastern DRC, the region cannot afford an unstable Burundi. It has also been indicated that President Paul Kagame of Rwanda would not hesitate to act against Burundi should the violence in Burundi spread and be seen to target ethnic Tutsi. It is therefore important for the AU to ensure peace and stability in Burundi, and we can expect to see just that.

Ethiopia will continue on its path of economic growth. However, Ethiopia will politically probably see more instability, especially in the centre of the country in the Oromia region, which will induce the government to be more repressive against those opposed to the government. Although Ethiopia’s government is accused of autocratic behaviour, it has succeeded in improving the economic situation of millions of Ethiopians. Whether this would be enough to satisfy the political aspirations of its population, remains to be seen. So one would probably see more economic improvement in Ethiopia on the one hand, as well as more political volatility on the other hand as the Ethiopians move up Maslow’s needs hierarchy. Unless the Ethiopian government is seen to be more liberal towards the people of Ethiopia.

In East Africa, al-Shabaab has broken into splinter groups, some of them aligning to ISIS, whilst some remained loyal to Al Qaeda. This should lead to a situation in 2016 where we could unfortunately expect more terror activities in Somalia as these groups jockey for position. It is also not inconceivable that some of these activities could spill over into the northern parts of Kenya. As is the case with the struggle against Boko Haram in Nigeria, the nature of the war against terror will therefore change.

In Tanzania we should see President John Magufuli becoming a stronger symbol of good governance and efficient and effective government. He is putting quite a number of his peers in Africa to shame with his approach. It is hoped that more African presidents would start to emulate his sterling behaviour.

Nigeria has adopted a budget in which considerable focus has been placed on diversifying the economy away from oil. More focus should therefore be seen in the fields of agriculture and mining. The foreign currency restrictions will probably remain in force in Nigeria, which should hamper efforts to import products, and subsequently should see the Nigerian manufacturing sector blossoming, as well as the industrialisation of agriculture, etc. In spite of Buhari claiming that Boko Haram was technically defeated, the security issues in Nigeria will not be solved during 2016. What would in all probability happen, is that Boko Haram will be forced to go “underground” and resort to a greater extent to actions such as suicide bombers. This will make it more difficult to defeat them in totality, but it can in itself be seen as a sign of success for Buhari’s government. As far as corruption is concerned, hopefully we can expect more of the strong actions against corrupt officials that we have seen so far under Buhari’s rule.

As far as manufacturing in West Africa is concerned, we should hopefully see a more concerted effort to develop the motor vehicle manufacturing sector in Nigeria and Ghana. Currently this is punted as an important scenario in both these countries. This should also positively affect both the upstream and downstream value chains. The overall effect of the manifestation of this phenomenon, would be a reduced dependence on commodity exports, as well as on the economic health of China.

South Africa’s economy will remain under pressure and could even face greater hardships should the ratings agencies reduce the country to junk bond status. This remains a very real threat given the actions of South Africa’s president in December when he fired his minister of finance and replaced him with a non-entity, just to replace him with a previous minister of finance four days later. Economic growth will remain at very low levels. This all should have a negative impact on the ANC’s support, and one can expect to see reduced support at the local government elections scheduled for later this year. It is not inconceivable that the ANC lose some of the major metropolitan areas to the opposition.

In the energy sector, we should see more investments in renewable energy. This has been a growing trend the past few years, and we should see more African countries developing solar plants, as has been the case in South Africa and Morocco, to name but two. Electricity shortages, however, will remain a headache for African countries for quite a while.

We should see more signs of water scarcity. Due to this, we will see food security remain as an issue of importance and concern for Africa. The drought of the past few months is causing famine in a number of countries. Food imports should therefore become more pronounced. Food scarcity and famine in parts of Africa will remain a problem, as is the case in countries such as Ethiopia. We should see food security become a higher profile agenda issue of Africa’s decision makers.

We should also see the continued trend towards urbanisation and the growth of the middle class. The slowing growth of the African economies would probably reduce the rate of growth of the middle class, but would not affect the rate of urbanisation. The latter should support the growth of infrastructure development players, specifically in the field of housing, retail complexes, office space, energy infrastructure. Cities will therefore continue to become more important from a growth and investment perspective. More companies interested in moving into Africa will develop a city strategy rather than a country strategy.

The investment in Africa by MNC’s will continue as these groups realise that Africa does indeed present the last investment frontier. The urbanisation trend, together with the growth in the middle class, and to a lesser extent the luxury market, will present these groups with a large market. 2016 should see more of these groups coming to Africa, as well as see groups already in Africa expanding their footprints into various African countries. It is especially the retail environment that will become the sector that draws the most of these MNC’s.

One of the answers to Africa’s lack of inter-Africa trade (which stands at 12% currently), is the phenomenon of regionalisation. Although Africa already boasts a number of regional communities, such as EAC and SADC, the spectre of a TFTA (Tri-partite Free Trade Area) will hopefully start to become a more visible reality during 2016. The signatories have until 2017 to ratify the TFTA, but one could expect to see visible steps towards the realisation of this free trade agreement.

Overall, it does seem that Africa will be an interesting place during 2016.  As always, there could be so-called Black Swans that could disrupt the best laid out plans. There is nothing, however, that one could do about these events other than having an agile and innovative approach. Let us hope that Africa will keep on rising!




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