High commodity prices and infrastructure spending will drive solid growth in Sub-Saharan African countries over the next two years, Standard and Poor’s said in a report on Friday.
The region, which includes some of the poorest states in the world, is beginning to benefit from demand for commodities and the related investment spending their development entails, S&P said.
“Several factors should account for this steady growth, including high public investment spending, strong commodity exports, and increasingly diversified trade with growing emerging economies, such as China,” S&P said.
S&P, one of the world’s top three credit rating agencies, noted that several countries -- Cape Verde, Uganda, Ghana, Gabon, Mozambique, Senegal, and Kenya -- had introduced large public investment programs and these could strain finances.
“However, should budgetary financing pressures materialize, we believe that most governments have some flexibility and could delay part of their capital spending programs.”
S&P said that the oil producing states of the region would benefit from high prices while countries which did not produce oil would face pressure on their finances as they sought to reduce energy costs through subsidies and other measures.
Additionally those countries such as Botswana, Zambia or Benin, largely dependent on a single export, would be vulnerable to volatile commodity prices.
Aid flows meanwhile, often a key component in public investment programs, could suffer from budget constraints in the United States and Europe, it added.