• Thursday, March 28, 2024
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Threat to Growth in Nigeria, rest of Africa rising daily, says AfDB

Akinwumi-Adesina

The U.S.-China trade war and uncertainty over Brexit pose risks to economic prospects in Nigeria and rest of Africa and the threats are “increasing by the day,” the head of the African Development Bank (AfDB) told Reuters.

The trade dispute between the world’s two largest economies has roiled global markets and unnerved investors as it stretches into its second year with no end in sight.

BusinessDay economists fear the risks may be even more telling in a large economy like Nigeria where growth has been tepid and the government lacking in the will required to mount badly needed economic reforms and block holes like the massive fuel subsidy bill.

Britain, meanwhile, appears to be on course to leave the European Union on Oct. 31 without a transition deal, which could severely disrupt trade flows.

Akinwumi Adesina, president of the AfDB, said the bank could review its economic growth projection for Africa – of 4% in 2019 and 4.1% in 2020 – if global external shocks accelerate.

“We normally revise this depending on global external shocks that could slowdown global growth and these issues are increasing by the day,” Adesina told Reuters late on Saturday on the sidelines of the Southern African Development Community meeting in Tanzania’s commercial capital Dar es Salaam.

“You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the United States and China. All these things can combine to slow global growth, with implications for African countries.”

The bank chief said African nations need to boost trade with each other and add value to agricultural produce to cushion the impact of external shocks.

“I think the trade war has significantly impacted economic growth prospects in China and therefore import demand from China has fallen significantly and so demand for products and raw materials from Africa will only fall even further,” he said.

“It will also have another effect with regard to China’s own outward-bound investments on the continent,” he added, saying these could also affect official development assistance.

Adesina said a continental free-trade zone launched last month, the African Continental Free Trade Area, could help speed up economic growth and development, but African nations needed to remove non-tariff barriers to boost trade.

“The countries that have always been facing lower volatilities have always been the ones that do a lot more in terms of regional trade and do not rely on exports of raw materials,” Adesina said.

“The challenges cannot be solved unless all the barriers come down. Free mobility of labour, free mobility of capital and free mobility of people.”