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IMF projects 4 % economic growth for Sub Saharan Africa

The International Monetary Fund (IMF) forecasts show that Sub Saharan Regional Economic Growth will pick up from 3 percent in 2018 to 3.5 percent in 2019, before stabilizing at close to 4 percent over the medium term.

The Washington Based global economic observer makes these projections in their 2019 Sub Saharan Africa Regional Economic Outlook launched in Abuja Nigeria on Tuesday 30th April 2019. Headlined “Recovery Amid Elevated Uncertainty”, the report says the economic recovery in sub-Saharan Africa continues, with about half of the region’s countries mostly non resource intensive countries expected to grow at 5 percent or more, which would see per capita incomes rise faster than the rest of the world on average over the medium term.

In depth the IMF says about 21 countries, mainly the region’s more diversified economies, are the once expected to sustain growth at 5 percent or more and remain on the impressive per capita convergence path they have been on since the early 2000s. On the other hand, 24 other countries, most of which are resource dependent economies, including the largest economies of Nigeria and South Africa, the growth will remain anemic in the near term.

“With about two -thirds of the region’s population residing in these countries, this implies much slower improvement in standards of living for the lion’s share of sub-Saharan Africans. Against the backdrop of a complex and less-supportive external economic and geopolitical environment, the implications for policies in the broadest of terms are twofold,” explains the report overseen by Anne-Marie Gulde-Wolf Deputy Director of IMF Africa.

IMF Africa further notes that for the fast-growing economies, there is need to hand over the reins of growth from the public to the private sector. According to the Regional Outlook, high growth in many of these countries has in part been spurred by higher levels of public investment, leading to a steady increase in public debt levels, notwithstanding rapid growth.

“This is a sign that fiscal policy has been procyclical, and the focus should switch toward limiting the increase in public debt and looking for alternative approaches to create fiscal space for further development spending, including through higher revenue mobilization, strengthening public financial management, and enhancing the efficiency of public investment,” says Papa N’Diaye Deputy Division Chief in the IMF Strategy, Policy, and Review Department.

Furthermore, the Sub Saharan economic outlook highlights that in the more resource-intensive countries and slower growing economies, there is a pressing need to complete the required fiscal and external account adjustments to lower commodity prices, for reforms to facilitate economic diversification, and to promptly address the policy uncertainties that are holding back growth particularly in Nigeria and South Africa. “Weaknesses in public and private balance sheets are weighing on credit to the private sector and growth,” observes IMF economists.

For all other countries, mostly resource-intensive countries, the International Monetary Fund says improvements in living standards will be slower explaining that most countries share the challenge of strengthening resilience and creating higher, more inclusive and durable growth. “Addressing these challenges requires building fiscal space and enhancing resilience to shocks by stepping up actions to mobilize revenues, alongside policies to boost productivity and private investment,” advices the global finance cooperation foster.

On current plans the IMF say Sub Saharan Africa macroeconomic policies are reasonably well calibrated in most countries in the region observing that most sub-Saharan African countries have either a neutral or a tight monetary policy stance and have announced fiscal consolidation plans, which if implemented would contain their debt trajectories. “These macroeconomic policies may need to be recalibrated to support growth in the event downside external risks materialize”. In addition the outlook recommends that countries would need to ensure that any shift in their policy stance is consistent with credible medium-term macroeconomic objectives, available financing, and debt sustainability

When launching the outlook in Abuja Nigeria on Tuesday Director of IMF Africa Department, Abebe Aemro Selassie shared that fast-growing countries that face elevated debt vulnerabilities would need to prioritize rebuilding their buffers. He said in the face of shocks that are deemed temporary, slow growing countries could seek additional financing to accommodate a more gradual macroeconomic adjustment adding that where this additional financing is not available, they should design the composition of macroeconomic adjustments with the least damage to near- and medium-term growth prospects.

“Such policies, together with measures to raise productivity growth and ensure more equitable sharing of the benefits of increased prosperity, would help sub-Saharan African countries strengthen resilience and create the conditions for sustained high and inclusive growth,” said Aemro Selassie. IMF envisions elimination of tariffs on most goods, liberalization of trade of key services, addressing nontariff obstacles that hamper intraregional trade, and eventually creating a continental single market with free movement of labor and capital.

The international Monetary Fund also observes that Africa’s new trade proposition, The African Continental Free Trade Area will likely have important macroeconomic and distributional effect in the year 2019 and beyond. IMF Africa Director Abebe Aemro Selassie says it can significantly boost intra-African trade, particularly if countries tackle nontariff bottlenecks to trade, including physical infrastructure, logistical costs, and other trade facilitation hurdles. “The picture is not uniform,” reads the report.

Furthermore, IMF says more diversified economies and those with better logistics and infrastructure will benefit relatively more from trade integration. “Fiscal revenue losses from tariff reductions are likely to be limited on average, with a few exceptions. Moreover, deeper trade integration is associated with a temporary increase in income inequality,” observed Aemro Selassie.

The AfCFTA agreement envisions elimination of tariffs on most goods, liberalization of trade of key services, addressing nontariff obstacles that hamper intraregional trade, and eventually creating a continental single market with free movement of labor and capital. The IMF suggests that, in addition to tariff reductions, policy efforts to boost regional trade should focus on reforms to address country-specific nontariff bottlenecks. “To ensure that the benefits of regional trade integration are shared by all, policymakers should be mindful of the adjustment costs that integration may entail” said IMF Africa Head on Tuesday.

Abebe Aemro Selassie said less developed and agriculture-based economies, trade policies should be combined with structural reforms to improve agricultural productivity and competitiveness advising that governments should facilitate the reallocation of labor and capital across sectors. “Active-labor market programs such as training and job-search assistance, and measures that enhance competitiveness and productivity and bolster safety nets income support and social insurance programs to alleviate the temporary adverse effects on the most vulnerable”.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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