Structural impediments to economic growth in South Africa and Nigeria could be unlocked after the two largest economies in Africa go to the polls in the first half of 2019, according to Dr Martyn Davies, managing director: emerging markets & Africa at Deloitte Africa.
"Sub-Saharan Africa is underpinned by three countries: SA, Nigeria and Kenya. Kenya is firing, [while] SA and Nigeria are in structural limbo," says Davies.
Kenya’s gross domestic product is expected to increase by 5.8% in 2019, Nigeria by 2.2%, while SA is forecast to grow a 1.3%, according to the World Bank.
The modest prediction for SA’s economic growth in 2019 follows Treasury slashing its forecast for 2018 to 0.7% in October.
Davies said SA had institutional integrity to improve growth rates after the general elections. "Question is, will politics allow this?"
He added that Nigeria was more complex as its major industry, oil, is subject to fluctuating international prices, while SA’s economy is more diverse.
Nigeria will hold presidential elections on February 16, and SA’s polls are expected to be in May, on a date that is yet to be announced.
'Politics determines economics'
Davies said 2019 would be the "year of politics" with a number of presidential, general and legislative elections on the continent.
"Let’s not forget… politics determines economics in frontier markets," Davies told delegates at the Deloitte Africa outlook conference on Thursday.
He pointed to China’s recent announcement of increased stimulus or spending to try to combat the effect of trade tensions with the US. The world’s second largest economy has, in the last few years, been focusing on services, and the return to massive spend on infrastructure is good news for many commodity-exporting African nations, said Davies.
Brexit a 'Western crisis'
He downplayed the risks to international growth associated with Brexit, saying the global financial crisis in 2008 was a "Western crisis" and had not severely damaged African and Asian growth rates.
A panel discussion on private capital development in Africa was also cautiously optimistic about 2019.
The level of opportunity is improving as governments on the continent try to raise levels of private investment, according to Vuyo Ntoi, investment director at African Infrastructure Investment Managers.
CEO of Southern African Venture Capital ad Private Equity Association Tanya van Lill echoed this sentiment, saying: "Private capital brings a multiplier effect…our members see a lot of opportunity on the continent."