Nigeria: Songhai Editorial (May 2016) - Cote d'Ivoire, Gabon, Ghana, Kenya, Nigeria, Senegal

Recent weeks have seen a steady stream of data releases from international institutions confirming the reality that we feel on the ground – 'commodity markets sneeze and (about half of) the region catches a cold'. The canker of corruption, and the broad cast of culpable actors across developed and developing nations alike, has been a theme also. On a more positive note, civil society continues to inspire, even in the face of adversity, as does growth in Senegal, and transactions across the region's real estate, ICT and power sectors.

Donor Data

Knock on effects of the global commodity price slump have led the World Bank to lower its 2016 growth projections for Sub-Saharan Africa from 4.4% to 3.3%. This chimes with the United Nation's Global Investment Trends Monitor report which points to the link between falling principal commodity price exports and 'faltered' FDI flows into Africa, Latin America and the Caribbean. Similarly, the IMF's Regional Economic Outlook for Sub-Saharan Africa notes that a) around half of the region's 45 countries have seen growth fall in 2015-16, and b) the remainder of Sub Saharan African countries has seen performance steady or actually improve. The first group includes both Nigeria and South Africa while the latter takes in a diverse suite of net oil importers and/or countries recovering from shocks, raising infrastructure investment or otherwise improving the business environment. Among them, Cote d'Ivoire, Senegal and the Central African Republic. A brighter picture is painted for 2017-2018 though, when the World Bank expects growth to increase to 4.5% on the back of economies such as Nigeria, South Africa andAngola finding their way back on to an even keel.


For now, Nigeria's economy continues to grapple with sharp difficulties e.g. March to April 2016 drop in FBN Quest's Purchasing Manager's Index from 54.4 to 46.5 on the back price volatility, power and foreign exchange constraints. Central Bank Governor Godwin Emefiele painted a sobering picture in his May monetary policy committee (MPC) statement including the first quarter of negative growth "in many years" in Q1 2016. In response, "the MPC voted unanimously to adopt greater flexibility in exchange rate policy to restore the automatic adjustment properties of the exchange rate". Details are yet to come but it is the strongest signal thus far that the totemic USD1:NGN197 exchange rate peg is to be relaxed. The other regional oil hegemon Angola has made its own volte face – turning to the IMF for a USD1.5 billion bailout package – conditionalities (by another name) will follow.

Ghanaian authorities, who were forced to turn to the IMF for support in 2015, won praise for "broadly satisfactory implementation of its reform programme (slippage on the wage bill notwithstanding). Positives noted by the IMF include reduction of the fiscal deficit from 10.6% to 6.7% of GDP in the last four years, a primary fiscal deficit at zero, above expectation payment of arrears and above projection 2015 economic growth of 4% per annum. We also note the uptick in business confidence recorded in the Q1 2016 Association of Ghana Industries business confidence survey. For all that, challenges remain acute. Headline inflation of 18.7% is among the highest in the region. Power supply remains problematic. Over the past couple of months, electricity provision has been more stable not least because of procurement of the controversially costly power barges from Turkey. But now, even expensive consistent power supply is off the cards – load shedding or "dumsor" is back. Just when businesses and consumers were getting out of practice of planning their lives and businesses around dumsor, the menace has returned.

Gabon meanwhile is having to deal with the retreat of Shell which is seeking to sell off US$700 million worth of its assets in the Central African economy. The International Oil Company (IOC) has been operating in Gabon since the 1960s and though it has remained tight-lipped about its divestments, clearly the commodity price slump coupled with Gabon's lacklustre oil production of late – a 30% reduction in the past 10 years- are likely to blame. This retreat may be a difficult sell to the electorate as Ali Bongo will be seeking to hold onto another term in August's presidential race.

Anti-Corruption Pow Wow

In an austerity era, few will dispute the urgency of sealing off the leakages of corruption. Such is the consensus around this point that the London Anti-Corruption Summit was able to side-step the embarrassment of British Prime Minister David Cameron being overheard describing Nigeria and Afghanistan as 'fantastically corrupt'. Asked to comment, Nigeria's president Muhammadu Buhari said first that "I am not demanding an apology from anybody, I am demanding a return of assets" and second that Cameron was not wrong.

It was as balanced a response as could be hoped for in light of what is being learnt about the role of the UK in the movement of illicit funds. Furthermore, no one could accuse the Buhari administration of being lack lustre on corruption. Though they may rightly worry that the current approach rests too heavily on the priorities of the office of the presidency rather than changes to the structure of governance in Nigeria.

At the moment, civil society organisations and the business community may struggle to give governance in Ghana the thumbs up, particularly with the emergence of the report from the Attorney- General regarding the controversial GHC3.6 million (US$940,000) cost to the taxpayer to brand 116 buses bus branding polemic. Having said that, should Nigeria, Ghana and others in the region deliver on plans articulated in London quite some ground will have been covered (see table below).

Bright Spots and High Ambitions

At 6.5%, Senegal is experiencing it strongest growth performance in over a decade – boosted by President Macky Sall's economic 'Plan Emergant' and encouraging growth in agricultural production.

Kenya's social enterprise ecosystem also appears to be pushing forward with companies like New Venture Africa seeking to plug the unemployment gap by linking start ups with high level consultants.

Still on the subject of job creation, Nigeria's business magnate Aliko Dangote says that over the next two years, he will seek to create a staggering 210,000 jobs mainly in the agricultural sector.

What's the Big Deal?

Please see below for a snapshot of the deals we're seeing being done across the continent:

  • In Nigeria, Vantage Capital announced its USD20 million investment in the real estate company, Landmark Africa.
  • And Orange's Orange Digital Ventures took a USD85 million equity stake in Africa Internet Group, owners of the much vaunted Jumia ecommerce company.
  • Still on the digital theme, Ghana's Surfline Communications is set to benefit from 5 million Euro investment from PCM Capital Partners.
  • The hydroelectric power company Virunga Energy is to benefit from a USD9 million CDC Group ten-year loan facility, targeting the construction of new power plants in the Eastern DR Congo.
  • CDC Group has also announced the acquisition of a 10.7% stake in I&M Holdings in Tanzania.
  • Also in East Africa, Progression Capital Africa and Equator Capital publicised its USD12 million investment in Jamil Bora Bank in Kenya.

Key Anti-Corruption Commitments

The table below lists what we believe to be some of the key, tangible commitments made by leadership of our countries attending the London Anti-Corruption Summit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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