The continent of the future

Pratibha Thaker looks at the shining lights and the hot spots in sub-Saharan Africa for 2007

Sudan:

inflation 8,5%

The government will continue to be based on an uneasy balance of power between the ruling National Congress party in the north and the semi-autonomous government of Southern Sudan. Although the 2005 peace agreement should hold, complex power- and wealth-sharing mechanisms create a number of potential flashpoints. International relations will be dominated by the question of Darfur. But, given heavy Chinese investment in the oil industry, the UN Security Council is unlikely to impose serious sanctions. Oil output will rise sharply, owing to the Petrodar concession, but the poor quality of the crude means that revenues are likely to disappoint. Nevertheless, economic growth will exceed 11%.

Angola:

inflation 16,6%

Presidential and parliamentary elections, which were scheduled to take place in late 2006, may now take place in late 2007, but any further delays in the fragmented electoral process could push them into 2008. The ruling party is in a strong position to win the elections, while the opposition, Unita, will struggle to hold together. Angola’s on-off relationship with the IMF will remain, but relations with China will continue to deepen. Heavy investment in infrastructure and the oil sector will drive economic growth, but the economy will suffer weak structural constraints, including a flawed judicial system, poor regulatory policy, and rampant corruption.

Botswana:

inflation 6,5%

Rising factionalism within the ruling BDP will fail to weaken President Festus Mogae’s authority. Senior party members will progressively jockey for position in the run-up to the 2007 party congress. Diversification of the economy away from diamond mining will move very slowly. But growth in services will be robust, driven by the good performance of the financial sector, tourism and diamond marketing and sales activities, following the transfer of some of De Beers’ activities.

Zambia:

inflation 8,6%

The fall-out from the controversial re-election of the President, Levy Mwanawasa, and his Movement for Multiparty Democracy (MMD) in 2006 is likely to die down. Compliance with the economic reforms agreed under the country’s poverty reduction and growth facility with the IMF may slip, as the government attempts to win back lost voters with lower taxes and labour reform. This would strain, but not break, relations with the IMF and other donors. The economy will be boosted by increases in copper production, but investment in the sector is unlikely to be maintained at the high levels of recent years.

Mozambique:

inflation 8,9%

President Armando Guebuza’s pragmatic mix of authoritarian politics and donor-supported market-oriented policies will continue to shape the agenda. Progress with reform could slow, given political opposition in the Cabinet to many of the proposals — in particular to the labour law — and the stalled privatisation of state utilities. Although activity in mega-projects in energy and mining will slow, a second generation of smaller projects, such as the Moma titanium mine, will come on stream. Overall economic growth will remain strong.

Lesotho:

inflation 4,8%

With no significant opposition challenge, Prime Minister Pakalitha Mosisili and his ruling Lesotho Congress for Democracy (LCD) are set to win the May parliamentary election. The government will continue to pursue its broadly technocratic approach to economic policy, while rising unemployment and stiff Chinese textile competition takes hold. Favourable investment policies will see a continued recovery in the textile industry and, alongside a revival in mining, this will push real GDP growth to 3,5%.

Swaziland:

inflation 5,5%

The new Constitution will not lead to any real transformation of Swaziland’s political system, unless the modernists can successfully press for political parties to be allowed. Squabbling over the legality of political parties, combined with the government’s lack of will to tackle corruption, the lavish lifestyle of King Mswati III and the economic plight of the majority of Swazis, will produce a tense political scene and a grim economic outlook. The sugar industry will suffer from the after-effects of the 2006 drought, and textiles will continue to be hit hard by Chinese imports.

Namibia:

inflation 5,3%

At its party congress in 2007, Swapo will decide whether Namibia’s head of state, Hifikepunye Pohamba, should replace Sam Nujoma as its leader. Economic growth will again be concentrated in the minerals sector: higher output of diamonds, uranium and copper will drive economic growth. This will not do much to tackle poverty and income disparity in one of Africa’s most unequal societies, where 60% of the population share less than 10% of the nation’s income.

Malawi:

inflation 10,5%

Support for President Bingu Wa Mutharika in parliament — consisting of his own party, the Democratic Progressive Party (DPP), a few other small parties and a number of independents — will become increasingly tenuous. The DDP is likely to face a challenging period, following a recent ruling by the Constitutional Court banning floor-crossing, on which the DPP has relied in the past. Although new investment in the mining sector will get under way, a tailing off of agricultural recovery and growth in the agro-industries sector after the drought of 2005 will put a brake on overall economic growth.

Kenya:

inflation 8,0%

Kenyans will return to the polls at the end of 2007, which is likely to be a straight fight between Narc-Kenya and ODB-Kenya, with Preisent Mwai Kibaki standing for re-election as Narc-Kenya’s candidate. The polls will be very close, but the Kibaki camp will have a slight edge because of the benefits associated with incumbency. Key sectors such as tourism and telecommunications will continue to perform strongly, while agriculture — especially the vital tea sector — will grow faster than in 2006 unless drought conditions return.

Somalia: no data

Clashes between the Baidoa-based, weak transitional federal government and the ascendant United Islamic Courts (UIC), which has taken control of most of the south of Somalia, threaten to intensify in 2007. The transitional government is virtually powerless, but with the support of the Ethiopian forces, the risk of a war remains very high. Mediation under the auspices of the Africa Union and the regional body, the Intergovernmental Authority on Development, will continue, but little headway is anticipated. A bitter and costly guerrilla war — and continued regional instability — would be likely.

Ethiopia:

no inflation data

The Ethiopian People’s Revolutionary Democratic Front (EPRDF) will retain its firm grip on power, but the ongoing trial of more than 100 people accused of a range of offences, including fomenting a coup, will stoke political tension and fuel uncertainty. But any social unrest will be diffused very swiftly by the security forces. Good rains at the end of 2006 will provide for healthy growth in agriculture, while continued capital investment in infrastructure and manufacturing will also help to support the economy.

Democratic Republic of Congo:

inflation 13,0%

Following years of dictatorship, civil war and economic decline, it remains to be seen whether President Joseph Kabila, the victor in the country’s first elected government for more than 40 years in 2006, is capable of leading an administration that can move towards establishing the rule of law and developing the massive economic potential. The support of donors will remain crucial to financing the operations of government and, despite continuing failures of economic management, they will judge it more important to support the political process than to penalise the government for its economic failings.

Burundi:

inflation 8,5%

President Pierre Nkurunziza and his party, Conseil national pour la défense de la démocratie-Forces pour la défense de la démocratie (CNDD-FDD), will maintain a firm grip on political power, but internal divisions could weaken the party. The welcome return to peace after so many years of fighting will boost economic growth, but it is doubtful whether the recent ceasefire between the government and Palipehutu-FNL will evolve into a conclusive settlement. Donor-financed capital expenditure will play an important role. Growth in construction, trade and manufacturing will also help to support economic growth of 5% in 2007.

Congo-Brazzaville:

inflation 4,0%

President Denis Sassou-Nguesso and his allies will retain a majority of seats in the National Assembly after the legislative election, scheduled to be held in 2007. The opposition will be marginalised, but political tensions will rise within the government coalition over the controversial plan to merge the Congolese Labour Party (PCT) with the other parties of the United Democratic Forces (FDU). Hardliners will adamantly oppose the merger, which would dilute their influence; they will attempt either to crush the initiative or take control of the PCT name in a successor party. Economic growth will fall in line with a temporary fall in oil output.

Cameroon:

inflation 3,0%

Parliamentary and municipal elections in June will be easily won by President Paul Biya’s ruling party, Democratic Rally of the People of Cameroon (RDPC), in the face of a divided and discredited opposition. The government will push ahead with structural reforms to open up sections of the non-oil economy to the private sector, but progress on the privatisation of the remaining state-owned enterprises including Camtel, Sodecoton and the national refinery, Sonara, will be erratic. Economic growth will benefit from a rise in oil production, growth in the agro-industry and forestry sectors, and expansion in aluminium production.

Equatorial Guinea:

inflation 4,5%

The country’s oil bonanza will help to consolidate President Teodoro Obiang Nguema Mbasogo’s position in 2007, but will sharpen the succession issue. The president and the influential first lady, Constancia Mangue Nsue Okomo, will throw their support behind their eldest son, Teodoro, who has a reputation for conspicuous consumption. Strong oil prices and rising oil production will ensure that growth remains robust, but will edge down from the previous decade.

Chad:

GDP growth 2,0%;

inflation 4,0%

Despite his re-election in 2006, President Idriss Déby Itno will face an increasing threat from several armed opposition groups. Rebel assaults and inter-ethnic violence will continue in the east of the country, while mounting casualties in senior military ranks will weaken military morale and motivation. Promises of rapid promotions and large cash bonuses may halt short-term defections, but such an overtly patronage-based system is likely to add to the weakening of the army’s cohesion and its effectiveness. Despite an increase in oil production, growth will be modest, dragged down by continuing political uncertainty.

Senegal:

inflation 1,9%

President Abdoulaye Wade is the favourite to win the February presidential election, while the ruling party, PPDS, will retain its solid majority in the National Assembly. The former prime minister, Idrissa Seck, is likely to be the president’s most serious rival, but will fail to secure the top job. The economy will be boosted by strong agricultural output growth, rapid expansion of the telecommunications sector, and preparations for the triennial summit of the Organisation of the Islamic Conference in the first quarter of 2008. But the secondary sector will continue to suffer from the negative impact of high oil prices and the ongoing financial difficulties of the country’s largest company, Industries chimiques du Sénégal (ICS).

Ghana:

inflation 9,2%

Corruption allegations against the ruling NPP, labour unrest and accusations of “tribal” politics will make the political atmosphere increasingly divisive ahead of elections in 2008. The political climate may also be soured by divisions within the main parties over the nomination of presidential candidates. Economically, the government’s plans to loosen the purse strings will increase both financing and inflationary pressure, while power shortages are likely to impinge on the broader macroeconomic environment. But Ghana will continue to outperform most of its West-African peers, with growth rising by almost 6%, thanks to strong commodity prices.

Nigeria:

inflation 10,9%

The April presidential election will be a two-way battle between Umaru Musa Yar’Adua, the former governor of Katsina State, who will contest the polls on the ticket of the ruling PDP, and the incumbent Vice-President, Atiku Abubakar, who will stand under the banner of the recently launched AC, in alliance with ANPP. This will result in a highly competitive tussle, with Yar’Adua the marginal favourite. But, even if Atiku loses the battle to win the presidency, the AC/ANPP alliance will do well in the north of the country. An escalation of conflict in the crucial oil-producing areas of the Niger Delta will remain a concern. Non-oil sector growth will remain robust, but political unrest in the Niger Delta will have a negative effect on oil and gas production, pushing down economic growth.

Pratibha Thaker is regional director in Africa for The Economist Intelligence Unit