RMB on Africa’s economic outlook for 2021

As the year 2021 unfolds, many African countries are facing fiscal challenges as a result of the economic repercussions of the COVID-19 pandemic. Governments have grappled with significant budget deficits and increased debt levels in an attempt to support their economies during the crisis. Despite these hurdles, there is room for optimism in the economic outlook for the continent, according to Daniel Kavishe, Economist for Sub-Saharan Africa at Rand Merchant Bank. In a recent interview with CNBC Africa, Kavishe highlighted several key sectors that are poised for growth and sustainability in the coming years. The continent is seeing promising developments in water infrastructure, energy, and digital sectors, which are expected to drive future economic expansion. These sectors represent long-term opportunities for economic growth that will not only benefit the current year but also set the stage for continued development in the years to come. Kavishe emphasized the importance of synchronized economic recovery plans introduced by governments towards the end of last year. These plans outline a roadmap for recovery over a span of three to five years, targeting sectors with the potential for sustained growth. By focusing on areas such as water infrastructure, energy, and digital technologies, African economies are aligning themselves with industries that have the capacity to support long-term economic stability. The shift towards digitalization and the expansion of logistical chains, both physical and digital, are expected to play a significant role in driving economic growth across the continent. Additionally, the Africa Continental Free Trade Agreement is poised to create new opportunities for intra-Africa trade, with the potential to significantly boost regional economic cooperation and development. Despite the challenges posed by the ongoing pandemic and the slow implementation of the free trade agreement, Kavishe remains optimistic about the transformative impact it could have on the continent's economic landscape. He noted that while the process of removing tariffs and increasing trade flow may take time to materialize fully, the long-term benefits of increased intra-Africa trade are substantial. The agreement presents an opportunity for African countries to increase their share of regional trade, which currently stands at a low percentage. Intra-Africa trade accounts for only about 16 to 17 percent of total trade on the continent, indicating a vast potential for growth and collaboration among African nations. Beyond the exchange of goods, the free trade agreement also paves the way for increased labor mobility and the sharing of skills and expertise across borders. This shift towards greater economic integration and cooperation is a promising indicator of the continent's potential for sustainable economic growth and development in the years ahead.