Business

Africa must brace for Brexit – ECA

KABANDA CHULU, Lusaka
THE Economic Commission for Africa (ECA) says the continent’s economy is set to feel the effects of Brexit following last month’s formal decision by Britain to start the two-year exit process from the European Union after last year’s historic referendum vote to leave the EU.
ECA Macroeconomic Policy Division director Adam Elhiraika said Africa’s economic growth declined from 3.7 percent in 2015 to 1.7 percent in 2016 due to weak global economic conditions, persistent low oil prices and adverse weather conditions and may further be affected by Brexit.
“The effects of Brexit may slow the global economy with spill over effects into Africa, mainly through trade and financial channels.
“Economic deceleration in China, subdued performance of the euro area and low commodity prices also pose risks for Africa’s growth. Rising debt levels also pose a concern for continental long-term growth,” Mr Elhiraika said in a statement issued by the ECA communications section.
He said weather-related shocks remained a regional risk, in particular in parts of eastern and southern Africa and could lead to poor harvests and heightens the risk of inflation.
“Ultimately, Africa’s growth is expected to rebound despite global headwinds even after feeling the effects of Brexit but security remains a risk in some African countries affecting economic growth in the process,” Mr Elhiraika said.
And commenting on the recently launched ECA’s Economic Report on Africa (ERA) 2017 titled ‘Urbanisation and Industrialisation for Africa’s Transformation’, Mr Elhiraika said the progress in combating poverty and addressing inequalities on the continent has remained slow.
“There is need for countries to embrace the rapid urbanisation on the continent and coming up with policies that will spur sustainable, inclusive growth.
“The high level of initial inequality, rapid population growth and delayed demographic transition and the sectoral composition of growth are some factors responsible for the limited impact of economic growth on poverty reduction,” he said.
ERA2017 urges governments in Africa to implement urban and industrial policies in a co-ordinated manner and to instigate and co-ordinate investments in urban infrastructure, particularly in electricity and transport, both to support industrial enterprises and to meet urban populations’ needs.

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