GDP of Africa
THE impending exit of UK bank Barclays from Africa is raising lots of dust, as theories fly over why a transnational that has a reputation as an emerging markets specialist of sorts pulled the plug on $70 billion in continental assets.
The analyses have swung from internal bank permutations following battles with regulators back in the West, to the growth forecasts for Africa. The latter view is now gaining currency, helped by the conflation with the uncertain international trading environment, an off-balance China and falling commodity prices.
Despite this, the bank’s African division performed almost twice as better as the lender’s overall in 2015, a year that was one of the toughest for most developing economies. Additionally, Barclays is also scaling down on operations in Asia, but this has not stopped the legions of Africa worst-case scenario painters from being emboldened.
The bank’s new chief executive Jes Staley fuelled the speculation when he said the phased departure was meant to “de-risk” the bank, even as the lender said it could retain a minority stake.
The African unit has been quick to bat back against claims that its operating climate is blame, playing up the case for a long-term view.
“We remain committed to Africa, where we continue to be optimistic about our growth prospects and to operate in the normal course of business, ” Barclays Africa chief executive officer Maria Ramos said in a statement, seeking to reassure clients.
The view of a continent about to fall through the floor following two decades of runaway growth is perverse, but it is significant to note that it has tended to be coloured by high-risk but short-term investors, think portfolio managers of off-shore funds.
As such, the rebalancing of China to a services-heavy economy has been cast as spelling doom to Africa, it’s largest trading partner, the bulk of the bilateral relationship being exports of resources.
But such outlooks only play to the tired stereotypes of the continent, Carlos Lopes, the executive secretary of the United Nations Economic Commission (UNECA) for Africa said.
“Africa’s narrative is changing. There is no doubt the continent has stepped into a new and higher growth projector. However, we are currently writing Africa’s story, ” he said at the annual David H. Miller lecture at the George Washington University last week.
The numbers back up his assertion. In the last decade the gross domestic product (GDP) of the largest 11 countries in sub-Saharan Africa have grown 51%—more than double the world’s 23% and four times that of the US, according to figures from financial data company Bloomberg.
The continent’s average consumer price index has kept at less than 8% since 2013, from more than 13% in 2008, a combination of rapid economic expansion and low inflation that has enticed investors, as other once-favoured emerging markets struggle.
The major drivers were consumer-focused industries that are taking advantage of the burgeoning population, materials (think construction) and the financial services industry—which outpaced emerging markets by 11%.
Only energy was the main loser. Yet the struggles of major exporters such as Angola and Nigeria have been conflated with the reduced demand by China for commodities to paint a dire outlook for the continent.