Remittance Income Boosts Growth

by EMMA OKONJI

Despite experiencing an overall market slowdown, countries across the continent are reported to have a positive economic outlook. Countries in the East African region are projected to grow by 6.3% due to inflows, with remittances serving as a key economic driver for most countries across all regions.

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 percent.

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 percent, 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 percent, while blaming the con- strained 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 percent.

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 percent, largely driven by a boost of 7.4 percent in the region’s biggest economy, Ivory Coast, where investment is driving rapid expansion.

North Africa’s Egypt is forecast at 5.3 percent, 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 percent, 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 percent. Angola, the region’s other economic leader, has the same forecast of 1.5 percent.

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 percent of total remittances owing 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 ows 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 percent of total exports that year. However, in 2017 the remittance inflows subsequently declined to $2.2 billion equivalent to 15.8 percent 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 percent of GDP this year, supported by project aid and remittances inflows.

ICAEW is a world leading professional membership organisation that promotes, develops and supports over 144,000 chartered accountants worldwide.

It provides qualifications and professional development, share knowledge, insight and technical expertise, and protect the quality and integrity of the accountancy and finance profession.

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Posted by on Oct 14 2018. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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