INTHEBLACK April 2025 - Magazine - Page 22
F E AT U R E
Dabalen believes that, on the back of
receding inflation, a gradual easing of policy
interest rates among countries in the region
should enhance household consumption
and investment in 2025 and 2026.
“Government spending across the region
will still be restricted by the limited fiscal
space that results from high levels of public
indebtedness and rising borrowing costs,”
he says. “Progress in fiscal consolidation
will continue, although at a moderate pace.
Primary deficits are narrowing more rapidly
thanks to declining deficits in
non-resource-rich countries and rising
surpluses in commodity-exporting countries.”
One of the drivers of SSA growth
is likely to be the AfCFTA. Set up in 2019
to strengthen Africa’s economic status
and stability, it sends a strong signal to
the international investor community that
the region is open for business and has
a single rule-book for trade and investment.
To date, 48 “state parties” have ratified the
Af CFTA agreement, although only a handful
of those have so far started trading under
its mechanisms and protocols. By boosting
intra-African trade and reducing tariffs,
Sisay says AfCFTA will foster industrialisation,
create more efficient supply chains, and expand
opportunities for small- and medium-sized
enterprises.
DOWN TO BUSINESS
SSA’s growth trajectory presents immense
opportunities for accountants, finance
professionals and business leaders.
“The region is home to the fastest-growing
economies in the world and, despite global
economic challenges, many countries
in Africa have shown resilience and
consistent growth,” Sisay says. “Urbanisation
and a growing middle class are also creating
demand for financial services, consumer
goods and infrastructure, making it suitable
for businesses.”
Given that many sectors in the region
are not fully developed, including financial
services, technology and manufacturing,
and labour relations are problematic, Sisay
says there is a role to play for firms and
professionals to address many of these
challenges through products and services,
financial management and assisting
regulatory compliance. He notes that FDI
has also created opportunities in many
sectors that demand professional support,
while emerging capital markets are providing
22 INTHEBLACK April 2025
advisory opportunities in markets such
as South Africa, Nigeria and Kenya.
“Ethiopia has just established its first stock
exchange, opening new frontiers in capital
markets,” Sisay adds. “Digital transformation
through the rise of fintech and mobile
banking, as well as the growing tech sector,
also require the support of innovative
businesses and professionals.”
RISKS AND VOLATILITY
On the flip side, there are some risks
associated with doing business in parts
of SSA. This was highlighted last year when
Australia-based Resolute Mining agreed
to pay US$160 million to the Mali
Government in a bid to free the company’s
CEO and two other executives who were
detained over a tax dispute.
More broadly, the World Bank warns that
there are threats to the growth outlook
for SSA from global and domestic
developments. Dabalen says global growth
could be affected by heightened trade policy
uncertainty, which in turn may result
in further geoeconomic fragmentation
that affects export-oriented economies
in the region. More trade barriers and
retaliation between trading blocs, as a result
of intensified protectionist measures, could
also dampen economic prospects.
There is also the continued risk of political
insurrection, particularly in Central and
Equatorial Africa.
Dabalen adds that weaker growth
in China could reduce the demand for
metals and minerals. “Lower prices for
these commodities, which are the main
exports of many countries in the region,
would significantly limit growth prospects.
It could also affect Chinese investments in
the region.”
SSA could face other headwinds, according
to Sisay, who highlights political instability
in the region as many countries face
uncertainty, conflict and unstable governance.
“Another risk stems from frequent policy
changes and weak institutions, leading to
an unpredictable business environment
in which the cost of doing business
is increasing,” he says. “Geopolitics has
been a huge challenge for Africa, and it
will continue to be in 2025.”
The other well-publicised threat is
inflation. Despite positive signs in some
countries, Deloitte’s research suggests Africa
will have the fastest-rising inflation of any
