SSA: Nigeria, Angola Under Less Pressure – Report
With stable global prices of crude oil, major oil exporters in the Sub-Saharan Africa (SSA) region are less under pressure, according to the Institute of International Finance, IIF.
The Institute said in a report that frontier Sub-Saharan Africa is emerging from the pandemic shock, but growth is comparably weak. The Institute’s position aligns greatly with Nigeria’s current macroeconomic indicators.
By data, the Nigerian economy appears better positioned but the reality is far different as citizen continues to struggle for survival. Though oil prices have been stable but weaker production volume denied the nation opportunity to generate enough from crude export receipts.
“We project a strong pickup in non-resident capital flows to $56.1 billion in 2021 from last year’s $23.6 billion”, the Institute stated. It explained that the recovery in foreign direct investment (FDI) is robust, but persistently higher investment will be needed over the medium term.
Financial conditions remain favourable, and strong Eurobond issuance drives the rise in portfolio flows, according to the IIF report. International Monetary Fund (IMF) emergency financing in 2020 and this year’s general special drawing rights (SDR) allocation have provided critical support.
Assistance from the International Finance Institutions (IFIs) will continue going forward, albeit at lower levels and with stronger conditionality, IIF stated.
In addition, the Institute said external financing needs are set to rise as substantial Eurobond amortization looms large. Thus, it believes the region will need to attract higher and less volatile inflows to reduce external vulnerabilities.
“External financing risks are highest in Ghana, where market concerns over the country’s dent are rising.
“Angola and Nigeria are under less pressure, while IMF programs should help Kenya, Senegal, and Zambia”, IIF stated.
IMF support to Sub-Saharan African countries reached unprecedented levels in 2020, with Short-term instruments with limited conditionality accounted for most of the funding.
Additional financing will likely be needed to support a robust recovery from COVID-19. In particular, multi-year arrangements could help anchor needed fiscal consolidation. #SSA: Nigeria, Angola Under Less Pressure – Report
Read Also: Nigeria, Angola, SA hard hit as COVID-19 drives SSA toward First…
