Fitch Ratings, in its sub-Saharan Africa (SSA) Credit Overview, expects average GDP growth for the 16 countries rated by the agency to rise above 5% in 2014, despite more subdued emerging market growth and less favourable commodity prices.
Fitch also anticipates SSA to continue benefiting from rising foreign direct investment (FDI), particularly in emergent oil and gas producers like Mozambique, Kenya and Uganda.
Public infrastructure spending is also expected to trend upwards across the region due to governments in several countries gaining access to new sources of funding and improved implementation capacity.
While an improvement in credit fundamentals over the past decade should make most SSA countries resilient, the prospect and threat posed by US Federal Reserve "tapering", will top the agenda in 2014.
According to Fitch, countries like South Africa and Ghana, which run large current account and budget deficits and have become increasingly dependent on foreign inflows to fund both the budget and the current account, will be most at risk.
The overview also identifies two divergent credit themes which have gained traction across SSA since May 2013.
The first theme is the "sharp deterioration" in government finances, alongside a weak commitment to fiscal consolidation, which prompted downgrades in both Ghana (B/Stable) and Zambia (B/Stable).
Secondly – and in contrast – a steady track record of prudent macroeconomic policies built up over more than a decade, strong growth prospects and commitment to reforms, and infrastructure investment were among the factors that contributed towards the upgrade of Mozambique (B+/Stable), as well as positive outlooks on Uganda and Rwanda, both rated ‘B’.
Of particular note, Fitch expects the development of the coal and natural gas sectors to support growth of 7%-8.5% in 2014-2015 in Mozambique, due to the scale of FDI estimated at $5bn annually.
However, Fitch also acknowledges the risks posed by potential delays in infrastructure investment, falling prices and political violence – risks typically associated with sub-Saharan Africa’s growth story.
Source Africa Insurance Review
No comments:
Post a Comment