Report: Africa’s Remittance Income is Key Economic Booster

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Emma Okonji

The third quarter 2018 report of the Institute of Chartered Accountants in England and Wales (ICAEW), produced by partner and forecaster, Oxford Economics, which focused on the African region economic performance, revealed that Africa projected a positive economic outlook, with remittance income expected to be a key economic booster in the coming months.

According to the report, which surveyed regions like East Africa, West and Central Africa, Northern Africa, Franc zone and Southern Africa, the East Africa continued to be the continent’s best performing region with a GDP forecast at 6.3 per cent. The positive outlook is due to the region’s economic diversification and investment-driven growth. Ethiopia remains the region’s powerhouse, with growth forecast at 8.1 per cent, which was attributed to the recent reforms under the new Prime Minister, Abiy Ahmed.

In Central and West Africa, the report puts the growth forecast at 2.9 per cent, while blaming the constrained growth in the regions, to subdued non-oil economic activity by Nigeria, the West Africa region’s powerhouse.

Ghana by contrast was described as the best performing country in the West African region with a forecast growth of 6.5 per cent.

Regional Director, ICAEW, in charge of Middle East, Africa and South Asia, Mr. Michael Armstrong, said: “Despite the recent growth slump; all regions in Africa are projected to report a positive economic outlook, with remittance income expected to be a key economic booster in the coming months.”

Growth in the francophone zone is forecast at 4.6 per cent, largely driven by a boost of 7.4 per cent in the region’s biggest economy, Ivory Coast, where investment is driving rapid expansion.
North Africa’s Egypt is forecast at 5.3 per cent, as a result of structural and policy reforms, which have boosted manufacturing and investment. The county’s tourism sector has also continued to recover. Likewise, Libya is expected to record a growth of 16.5 per cent, owing to posted improvements in oil production after the civil conflict, the report said.

Southern Africa, according to the report, has been affected by continued slow growth by the regional heavyweight South Africa, forecast at 1.5 per cent. Angola, the region’s other economic leader, has the same forecast of 1.5 per cent. Strong growth in both Botswana and Zambia is said to have little effect on the region’s overall performance.

Remittance income was emphasized in the report as a major economic factor for most African countries. Nigeria was the biggest receiver of remittances on the continent. The West African economic powerhouse received $22 billion, which is about 29 per cent of total remittances flowing to the continent in 2017, mostly from the gulf, the US and United Kingdom.

Egypt was the second biggest receiver of remittances on the continent with $20 billion of remittances. One of the countries highlighted where remittance flows continues to play an important role in terms of external accounts is Ghana. According to the world bank, remittance inflows amounted to $2.5 billion in 2014, equal to roughly 18.6 per cent of total exports that year. However, in 2017 the remittance inflows subsequently declined to $2.2 billion equivalent to 15.8 per cent of exports.

Uganda’s economic growth was reported to have recovered markedly last year. The country is expected to post a surplus of about 5.6 per cent of GDP this year, supported by project aid and remittances inflows.

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