While Africa’s external debt has increased slightly, at 32 percent of gross domestic product (GDP), it remains far below its past peak (55 percent in 2002). While there is no general solvency issue, liquidity requirements are pushing some countries to request IMF support. The increasing public debt on the continent is also a concern, driven by countries with fiscal vulnerability, particularly some oil exporting economies such as Algeria, Angola, Libya and Nigeria. After a three-year commodity shock, the moment of truth is approaching: many countries will have to accept IMF money and adjust their fiscal balance accordingly.
“Despite its challenges and recent severe financial pressure’s on commodity exporters, the African continent has significant economic potential,” said Stéphane Colliac. “Further corporate expansion and development is possible – we predict Africa’s growth to be +2.6 percent in 2017. However, liquidity is under pressure as many countries have recently experienced currency depreciation pressures.”
Main continental risks
- #1 Political risk and uncertainty
- #2 Commodity price/exchange rate issue
- #3 A growing debt pile due to vulnerable fiscal policies