Despite an economic slowdown, most African countries are reported to have a positive economic outlook. This is according to the Institute of Chartered Accountants in England and Wales’ (ICAEW) latest report.
In Economic Insight: Africa Q3 2018 launched yesterday, the accountancy body provides GDP growth forecasts for various regions including East Africa which is forecast at 6.3%, West and Central Africa as 2.9%, Franc Zone at 4.6%, Northern Africa at 1.8% and Southern Africa at 1.5%. The report highlights remittances as a key economic driver for most African countries.
Ethiopia remains the region’s powerhouse, with growth forecast at 8.1%, thanks to the recent reforms under new prime minister Abiy Ahmed.
The report observes that the positive outlook in the East African region is due to the region’s economic diversification and investment-driven growth. Last year, diaspora remittances were Kenya’s highest foreign exchange earner at Ksh197 billion, overtaking tea, coffee and tourism.
Remittance income was emphasized in the report as a major economic factor for most African countries. Nigeria was the biggest receiver of remittances on the continent. The West African economic powerhouse received 29% ($22 billion or Ksh2.2 trillion) of total remittances flowing to the continent in 2017, mostly from the gulf, the US and United Kingdom.
Egypt was the second biggest receiver of remittances on the continent with $20 billion (Ksh2 trillion) of remittances. One of the countries highlighted where remittance flows continues to play an important role in terms of external accounts is Ghana. According to the world bank, remittance inflows amounted to $2.5 billion (Ksh250 billion) in 2014, equal to roughly 18.6% of total exports that year. However, in 2017 the remittance inflows subsequently declined to $2.2 billion (Ksh220 billion), equivalent to 15.8% of exports.
Uganda’s economic growth was reported to have recovered markedly last year. The country is expected to post a surplus of about 5.6% of GDP this year, supported by project aid and remittances inflows.
The report notes that despite remittances playing an important role in African economies, policies should focus on reducing the cost of remitting funds.
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