Economy
South Africa poverty rate climbs to 40%, inequality highest globally—IMF
International Monetary Fund IMF, said that fast growing debt has constrained policy space. in South Africa economy resulting in negative per-capita growth. The article IV consultation report also said that the poverty rate in South Africa stands at around 40 per cent while unemployment crept up to 27 per cent; almost twice that level for the youth and income inequality one of the highest globally. According to the IMF report on South Africa, “Fiscal and monetary policies were eased, but growth remained subdued. The Fiscal Year 2017/2018 consolidated fiscal deficit is estimated to have expanded to 4.8 per cent of GDP from 4 per cent of GDP in the previous year.”
It said “Monetary policy was eased by a total of 50 basis points, in July 2017 and March 2018. Nonetheless, GDP growth edged up only slightly from 0.6 per cent in 2016 to 1.3 per cent in 2017. Amid a marked growth deceleration, some of South Africa’s economic and social achievements after the end of apartheid have recently unwound. While the economy is globally positioned, sophisticated, and diversified, gaps in physical infrastructure and education create large productivity differentials across sectors. Low consumer and business confidence has dampened productivity growth.
“Major obstacles to growth included a regulatory environment not conducive to private investment, inefficiencies in SOEs increasing the cost of key inputs, labor market rigidities, insufficient competition in product markets, corruption, and policy uncertainty. Inflation moderated to 5.3 per cent and the current account deficit narrowed to 2.5 per cent of GDP in 2017. The recent political transition offers a renewed opportunity to advance reforms and exploit the economy’s potential. The stated priorities of the new administration—combating “state capture” and promoting jobs and growth—point in the right direction.
“On current policies, staff projects a modest growth recovery to 1.5 percent in 2018 and 1.8 percent in the outer years, slightly above population growth. Inflation is projected to ease to 4.9 percent in 2018 and edge higher to 5.5 percent in the outer years. The current account deficit is expected to widen to 2.9 percent of GDP in 2018 and to around 3½ percent of GDP over the medium term. This baseline scenario is subject to upside developments, but downside risks seem more prominent. Should structural bottlenecks be addressed, South Africa has broad-based potential to boost growth significantly, aided by deep and liquid financial markets, a solid domestic investor base, a floating exchange rate, and limited susceptibility to exchange rate risk, low foreign currency exposures, and rollover risk; long debt maturities and access to segments of the global financial safety net.
“However, significant vulnerabilities arise from fiscal risks related to weak and poorly managed state-owned enterprises and other spending pressures. External risks include large gross external financing needs, and a current account deficit financed by flows that are prone to sudden reversals in response to abrupt changes in global financial conditions and sovereign credit ratings. Disruption in trade flows and a fall in commodity prices would worsen the twin deficits and dampen growth.
Directors urged the authorities to deepen the fight against corruption and advance the ambitious reforms in product and labor markets to raise productivity and enhance private sector participation. They recommended the forceful application of the Public Financial Management Act to increase deterrence against corruption. Directors called for the completion of measures in the telecommunications and mining sectors to attract higher private investment and create employment.
“They noted that further progress is needed to contain fiscal risks from state-owned enterprises and rethink the business models, including by engaging in strategic equity partnerships with the private sector. Directors stressed that improved competitiveness and higher growth are critical for poverty reduction in South Africa. Enhancing education quality and labor market flexibility and leveraging the opportunities provided by digitalisation will boost efficiency and support growth. Fiscal policy needs to focus on containing the rise in public debt and building buffers against potential shocks. Reducing the high wage bill, improving the quality of expenditure, and strengthening tax administration would contribute to this objective and strengthen the role of fiscal policy in addressing inequality. Some Directors noted that the primary expenditure ceiling could usefully be accompanied by a debt ceiling. Directors commended the South African Reserve Bank’s effective inflation targeting, and welcomed the Bank’s intention to lower inflation toward the midpoint of the official target band. They noted that low and stable inflation would benefit poorer households more, who tend to face the largest burden of high inflation. Directors emphasised that monetary policy should remain cautious, paying attention to fiscal policy and upside inflation risks”.
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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