Some Countries Experience Growing Pains in sub-Saharan Africa
The Financial Times has a lot to say this week about the regional outlook in sub-Saharan Africa. Even though the region is expected to grow by 6 percent in 2014, some top performing countries in sub-Saharan Africa have taken a hit due to the tapering of U.S. monetary stimulus. Ghana, Nigeria, Uganda and Zambia have seen a drop in currency values against the dollar since January 2014. In a blog post from a couple weeks ago, AGI Senior Fellow Amadou Sy examined which African countries would be hardest hit from the recent emerging market volatility. In addition to the turbulence caused by U.S. tapering, African economies have also been hit by a Chinese reduction in manufacturing that has driving down commodity prices. Lower revenues from commodities, such as copper in Zambia, are expected to exacerbate current account deficits.
In related news this week, Zambia removed two laws that previously restricted foreign exchange. In response to the removal of the laws, the Zambian kwacha has experienced its greatest gain against the dollar in 15 months.
Rwanda Announced as Most Enticing Retail Market
Despite the impacts of tapering and low commodity prices sub-Saharan Africa is increasingly viewed as a region with fast growing consumer markets. On Monday A.T. Kearney released its Africa Retail Development Index, it gave the nod to Rwanda as the most attractive market for the retail industry and Nigeria—the eighth most populous country in the world—came in second. Indeed, Rwanda has moved up 22 spots in the World Bank’s “Ease of Doing Business” rankings from 54th in 2013 to 32nd in 2014 out of a total of 189 countries.
Europe Considers New Measures for Mainly African Migrants
This week Spain experienced a large border rush at the razor wire fences of its North African enclave Melilla. Spain responded by doubling security forces in the town. This follows similar events at another Spanish enclave, Cueta, in February. Spanish military police fired rubber bullets at the migrants, and drew criticism from officials in the European Union. Italy is another destination popular with African migrants from Mali, Sudan, the Gambia, Somalia and even the Central African Republic. Last year’s tragic overturn of a boat full of migrants near Lampedusa brought attention to the issue of migration. However, efforts to build an EU-wide policy on immigration have been slow. Once Italy takes over chairmanship of the EU in June, the country plans on proposing the issuance of EU humanitarian visas. These visas would allow other members of the EU to share the costs of taking in migrants, which Spain and Italy overwhelmingly bear.