Sub-Saharan Africa outlook 2016

This post provides ATM’s  Sub-Sahara trends and outlook for 2016. In the coming posts we will further explore some of the key drivers, risks and opportunities.

Africa Trends – Sub-Sahara

Mega-trends – uncertain times, end of easy growth:

  1. Continued, but slowing short term growth. Growth will continue based on IT/technology and pay-off from earlier reforms. Medium term less certain and depending on renewed reform drive.

  2. The DNA is not changing. African states and institutions are overall not getting stronger. Politics is driven by neo-patrimonialism. A few places see incremental improvements, but similarly, a number of places are stagnating or drifting back in terms of political and economic space. Limited capacity to handle crisis.

  3. End of commodities boom, cheap money and China driver. Growth drivers slowing, no fiscal space for cushioning. Political complacency now beginning to backfire.



Status, July 2014


To watch

Present situation

Social development

Growth and macro-economy

Governance and security

Global drivers

Second best

Trend: ↘

Growth continues, but risks increasing. Medium term

Macro-economic stability continues

Market size

Democracy →


Security concerns →


  • Increasing interventionism

  • Key infrastructure (power, harbours)

  • Popular dissatisfaction

  • Root causes and needed reforms progress

  • Major security incidents

  • China slowdown impact

Business implications:

  1. Market size and strength: Growing. Still substantial gaps with opportunities for good returns. Consumer markets in booming Lagos, Nairobi and other urban areas of particular interest. Kenya and to some extent Nigeria will continue with continue as growth engines, while Ghana, Zambia and to a lesser extent Tanzania, Uganda and Mozambique will face serious slow-down. South Africa continues on a slow-growth long-term decline trend due to political uncertainty, dependence on China and lack of reform.

  2. Politics: More places see overoptimism in terms of investment attractiveness. Increasingly, populist interventions used, gradually undermining earlier progress.

  3. Security: Risks stabilising, but at a high level.

  4. Regulatory framework, contracts and contract sanctity: Formal legal frameworks are gradually improving. Yet contracts and contract sanctity issues remain a serious issue. Populist interventions an increasing risk for governments under pressure, especially towards election season.

  5. Assets (staff, capital, profits);on balance unchanged, but with increasing risks in crisis countries – could worsen with lower oil price.

  6. Ebola; the main risks appear to be over. Possibilities for investors with expertise and willingness to take high risk in countries emerging from Ebola.

Noteworthy development in ATM’s focus countries:

In the 8 countries closely followed by ATM three points are worth following:

  • Zambia: Rapidly facing crisis territory. Growing fiscal deficits, power crisis and a high degree of political complacency combined with elections next year is a lethal cocktail for a country that depends on copper for 80% of exports.

  • Ghana remains in trouble despite an IMF programme notionally being on track. Continued corruption – most recently exposed across the judiciary – lack of reform and an upcoming election (Dec. 2016) are all major risk points. Angola, Tanzania, Uganda and Mozambique are all facing similar challenges although for now the challenges are slightly less serious.

  • Nigeria is facing continued security challenges, a fiscal crunch and exchange rate pressure, but President Buhari continues to manoeuvre well. His political capital and support may be enough to drive non-oil growth and thereby unleash some of Nigeria enormous untapped potential.

China slowdown is the main cause of the slowdown, both through less demand for extractives (oil, copper) and slowing investment. ATM’s view on the China slowdown is that the while growth rates may remain high (around 6%), China’s growth will change towards domestic consumption. In other words, the slowdown is real and African countries need to adjust to that reality.

We are closely watching if and how governments are acknowledging and reacting to the slowdown. Some of the initial political/official reactions have been disappointing; largely expressing denial and continued complacency. Risks, especially around elections for inward-looking, populist interventions are therefore increasing. At the same time the new urban middle-class, strongly facilitated by increased transparency and easy access to information may counterbalance some of these negative trends.

El Nino: ATM are not experts on El Nino, but we acknowledge the risk to harvests, power generation, destruction of infrastructure and humanitarian disasters.

Scenario status:

ATM operates 4 core scenarios. Overall, there are most features from the 2nd best scenario and an increasing number of features from the 3rd scenario (credit, institutional reform speed, fiscal space and China slowdown). We are also closely following key political events – notably the Tanzania, Zambia, Ghana and Uganda elections and the probability and impact of uncertainly or (less likely) serious unrest.


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