October 16, 2020/United Capital Report
According to the latest report by World Bank on the Sub-Sharan African (SSA) economies, many countries within the region are seizing the opportunity created by the COVID-19 crisis to accelerate long-needed structural but unpopular reforms to guarantee more sustainable fiscal positions in the near future. Herein, we highlight some of the notable reforms seen across the region.
In South Africa, the government has announced sweeping reforms to address energy shortages and reduce its dependence on the state public utility Eskom. Accordingly, private companies have been invited to submit bids to supply additional renewable energy to the grid, while municipalities can directly procure electricity from private sector renewable energy producers, thus ending the Eskom single-buyer model. Also, Businesses (mining and other industries and commercial enterprises) are now allowed to produce electricity for their own use. In Nigeria, the government has taken important steps to eliminate its petroleum and power sector subsidy regime. Elsewhere, the Ethiopian government continue to make progress with the deregulation of telecommunications. In May 2020, it called for Expressions of Interest for new telecommunications licenses.
Overall, we are of the view that given the tight fiscal space available to most of these countries, key but largely unpopular reforms such as the above will be critical to boosting the region’s economic recovery, especially in a post-COVID19 environment.
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