Stock markets on the African continent have shown mixed fortunes as 54 nations celebrate Africa day. For example, Zimbabwe's All Share Index (ASI) started 2021 in fine form as the Exchange's Index soared by +104.03% contrasting with its Nigerian counterpart that saw a -4.83% slump year-to-date (YTD). The table below shows a kaleidoscope of African Exchanges and their returns in Q1 2021.
Zimbabwe's ASI climbed by a stunning 104.03% YTD, closing the previous week on 5,378.9 points. This was followed by the NSX Namibia and South Africa's JSE ASI which saw 12.58% and 10.62% growth, respectively.
On the downside, Nigeria's ASI plunged by -4.83% YTD to 38,324.07 points, with Ghana and Egypt making up the countries with the least ASI growth rate, the former with a decline of -2.21% YTD while the latter eased by -1.04% YTD (see table 1 below).
Table 1: 2021 African Markets Performance (YTD)
According to the World Bank, Zimbabwe's economy is set to rebound by +2.9% in 2021 despite an economic crisis aggravated by the COVID-19 pandemic.
The rebound is expected to be spurred by the recovery of agriculture and base effects. A forecast bumper harvest and continuation of rule-based monetary policy would stabilize food prices and improve food security. However, disruptions caused by the pandemic would continue to weigh on economic activity, limiting employment growth and improvements in living standards.
The African Development Bank (AfDB) projects the Namibian's economy to grow by +2.6% in 2021 and +3.3% in 2022, on the back of a steady recovery in financial services, tourism, retail and wholesale trade, and the mining industries-combined with an improvement in the regional and global economic environment. But the economy still faces substantial risks and challenges in the short to medium-term.
Nigeria's economy grew +0.51% in the first quarter, marking two consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020. The growth could be ascribed to higher crude oil production and rising international oil prices as activities slowly regain their momentum after an easing of coronavirus-related economic lockdowns.
Analysts are optimistic about the economy's growth for 2021. Stakeholder optimism is buoyed by the improved oil price above the budget benchmark of $40 per barrel. The stronger confidence in global recovery has also added to the general feeling of strong growth in 2021 as supply chains become restored and more people get vaccinated for the coronavirus disease. Although optimism appears justified, the Nigerian government still needs to step up its quest to diversify its revenue source away from oil to insulate the economy from future shocks that may arise from oil price volatility.