Figures released yesterday by Bankserv Africa have showed that South Africa is showing signs of a slow recovery.
The nation, which had previously been classified by the monthly Bankserv Africa Economic Transaction Index (BETI) as in a stagnant state, showed a month-on-month recovery of 0.6 percent for August 2012. The positive growth was the first for the country in four months, and, according to Bankserv’s spokeperson, Brad Gills, brings it in line with other recovering nations. “The BETI confirms the trend whereby a slow recovery seems to be the new normal across the globe,” he said.
South Africa, which sits behind countries such as Ghana and Nigeria in terms of speed of growth, also showed a 2.9 percent year-on-year improvement. However, the BETI index also showed that recovery was still fairly weak as the monthly growth figures were inconsistent from month to month. Investors and the public alike are also being warned that a positive growth of this size does not necessarily mean that the economy will start to rapidly improve.
Getting “back on its feet”
South African economist, Mike Schussler, spoke modestly of the country’s growth increase: “Year-on year and quarter-on-quarter, the numbers look good, but month-on-month it still shows a decline.”
It is not a sign of massive growth, he said, “Rather, it is an indication of our economy fighting to get back on its feet.”
Africa “top priority”
South Africa last week welcomed new World Bank president, Jim Yong Kim, on his first official international visit since his appointment. Kim, whose visit started in the Ivory Coast and ended in South Africa, was carried out to mark the start of a new relationship between the entire continent of Africa and the World Bank. Kim said during his trip that Africa is his “top priority” and that he was deeply committed to the growth and success of Africa.
The World Bank’s actions are recognition of some of the slow signs of recovery that many African nations like South Africa are showing. Many forecasters have also said that global perception of Africa is changing, due not just to the growing South African economy, but also to the emergence of nations such as Nigeria, Tunisia and Ghana, which are all poised to be international investment hubs of the future.
Investors are starting to realise that opportunities in Africa are now outweighing the risks that were once so prevalent. Many of the world’s top banks, for example, are starting to expand their services as they realise the potential returns throughout the African continent. British bank, Barclays, is one that is taking advantage of these emergence predictions. Last week it was announced that the bank would be launching an international money transfer service, called Pingit, in Kenya. The financial services provider launched the service so that it could tap into Kenya’s growing diaspora remittance market. Kenya was specifically chosen as the first African country in which to launch this service as it had received around $600 million in global remittances in the first half of 2012 alone.
“The launch of Barclays Pingit on the Kenyan market is an affirmation of the country’s growing relevance in the international financial market,” said Adan Mohamed, Barclays Bank regional managing director for East and West Africa.
The banking giant is showing its faith in the African economy by also announcing plans to launch Pingit in South Africa, Botswana, Xambia, Tanzania, Egypt, Ghana, Zambia, Zimbabwe, Uganda, the Seychelles and Mauritius by the end of 2012. Of further significance are Barclays’ plans to roll out Pingit in Africa before it rolls the service out in Europe – which it intends to do in 2013.
Overall, with the revelation of South Africa’s ‘slow recovery’ status coupled with the international investment and commitment in the wider African economy, the outlook for the continent looks promising. Jim Yong Kim stated the importance of optimism in reversing the past bad fortunes of Africa. “For me, optimism is a moral choice,” he said. "If you are a person who is privileged, has resources, and you go into a situation where you are working with people who are very poor, if you are cynical and pessimistic and negative, that is absolutely deadly for poor people.”
It is hoped that Kim’s optimism theory will help strengthen the World Bank’s effectiveness in helping the African nation. Last year, the World Bank invested around $53 billion in developing countries. This year, the role of the World Bank in Africa’s development will be eagerly anticipated.