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ECONOMY: Sub-Sahara Africa: Falling Commodity Prices and Chinese Slowdown


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Sub-Saharan Africa’s (SSA) growth was 3.4% in 2015 according to the IMF against 4.0% in 2009. As far back as 1999 the rate was below 2.8%. The slowdown in activity is likely to continue this year, 3.0% according to the IMF and 2.6% according to Coface, the international trade credit insurance company.

While commodity prices have plummeted 45% in two years, the oil price has fallen almost 60% to around USD $50. SSA commodity exporting countries, and particularly oil exporters, are the most severely affected by this shock.
For some countries it is a twofold struggle. On top of the fall in commodity prices, there has been a slowdown in activity in China since 2010, with many countries export considerable quantities of commodities to China.

There are 10 countries whose economies should slow down most between 2013 and 2016, (see chart n°1), oil exporters: Angola, Nigeria, Equatorial Guinea, Democratic Republic of the Congo (DRC), Chad and Gabon and exporters of other commodities: South Africa, Liberia, Ghana and Zambia.

Some countries like Angola and the DRC, whose growth declined by 4.8 and 3.5 percentage points respectively during the same period under, are clearly characterised by a strong dependence on China. Their share of exports to China exceeds 40% of total exports, and commodities as the share of earnings generated by natural resources is between 30% and 40%.

In addition, there are domestic factors which explain the slowdown in activity such as shortages of electricity in South Africa, the impact of El Niño and governance problems, as well as significant security tensions in Nigeria.

In this context, the external risk has increased considerably in these economies. Their current account balances have deteriorated under the effect of falling revenues from commodity exports (see chart n° 2) and negative shocks in trade have been particularly pronounced.


The current account balances in Gabon, Angola and Liberia have fallen between 10 and 20 percentage points of GDP between 2013 and 2016. This phenomenon has been accompanied by strong downward pressure on their exchange rates against the dollar, which itself has caused a marked increase in inflationary pressures (see chart n° 3).

Angola, Ghana, South Africa, Nigeria and Zambia have had to cope with a massive depreciation of their exchange rates against the dollar. This phenomenon is unlikely to be corrected this year. This depreciation is expected to reach between 30% and 52% between 2013 and 2016 according to BMI and these countries’ consumer price levels are expected to post the largest increases (between 4 and 12 percentage points according to BMI) and hit far higher levels than the targets set by the central bank.

However, currencies and commodity prices have generally stabilised since the start of 2016. Furthermore, concerning inflation, SSA has traditionally been the zone where oil price fluctuations in the international markets have barely been transmitted to domestic prices.

More than half of SSA countries adjust their fuel prices in a discretionary manner while 40% of them make these adjustments by using automatic formulae3. Distortions have nevertheless been reduced in some countries such as Angola and Ghana, as domestic prices have increased markedly as part of reforms that have reduced energy subsidies to restore some budgetary margin.


As they face a depreciation of their exchange rates against the dollar, a number of SSA countries have tried to maintain a certain exchange rate, but this strategy has sometimes proven to be pointless given the persistent downward pressure linked in particular to weak commodity prices.

The National Bank of Angola has taken restrictive measures on the allocation of foreign currencies, leading to a lengthening of payment periods for many companies, and has also on two occasions decided to devalue the kwanza (June and September 2015).

Nigeria decided in mid-2015 to adopt restrictions on about 40 products to stabilise the exchange rate and made its exchange rate regime flexible on 20 June. Maintaining the exchange rate was clearly unsustainable, particularly in view of the level prevailing in the parallel market (around 350 naira per dollar in early June 2016, versus 199 naira for the official rate). After a 30% depreciation on 20 June, the new exchange rate was 260 naira per dollar.

Furthermore, foreign exchange market interventions also took place in Nigeria to contain the downward pressures on the exchange rate and stem capital flight. According to IIF4, in Nigeria for example, capital inflows fell from more than USD $32bn in 2012 to USD $17bn in 2014 and less than USD $7bn in 2015.

The fall in reserves is particularly worrying in countries that have limited leeway such as Chad and the DRC, whose current reserves appear to cover less than one month of imports according to IMF estimates, a critical situation. The fall has also been significant in Nigeria where, according to the IMF, reserves all in all cover no more than 3.7 months of imports versus six months in 2013.

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