Younger population counts in Africa’s favour – Moody’s

Moody’s is delving into political stability, good governance, economic and fiscal policy certainty in assessing South Africa’s economic outlook to determine the country’s credit rating, experts told the international ratings agency’s Sub-Saharan Africa investment summit in Johannesburg yesterday.

The gathering found the biggest risks facing SA were due to 74% domestic politics, 16% global economy and 10% governance, with Moody’s pointing to a growing gulf in income inequality in the country – a concern that could pose social volatility, compared to other emerging markets.

A panel discussion focused on the sovereign growth and fiscal outlook, and Moody’s lead sovereign analyst Lucie Villa said the government was “still constrained to implement good policies”.

Having last seen a surplus budget in 2009, with capital spending of 5%, SA spent 16% on transfers and subsidies to the public sector and another 16% on households.

Moody’s associate managing director responsible for emerging market insurance and African banking Antonello Aquino said protectionism posed challenges to an export-driven growth strategy.

“However, we have seen an acceleration in intra-Africa trade, which is positive,” he said.

With a 5% population over the age of 60, Africa had an edge over Europe, which had a 25% population in the same age group, “meaning that the continent has a demographic advantage of a sizable youth population, which could grow the continent’s economy”.

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