A greater private sector participation in the economy and wider green-led activities and investments are expected to drive recovery from the pandemic in the Middle East and Africa in 2021, but recovery will be uneven, Mashora Group said .
In its digest on political and economic developments in the region, specifically amid the COVID-19 pandemic, Mashora Group said the Middle East and Africa will see more activity in green financial instruments, especially as countries in the Gulf region continue to develop large-scale solar power plants and investments in other green infrastructure projects, which will accelerate technology adoption across the region.
The African Continental Free Trade Area (AfCFTA) agreement, which came into effect as of January 2021, making the continent the world’s largest free trade area is estimated to cover a market of 1.3 billion people and over $2.5 trillion in GDP, distributed across the 55 states, Mashora said.
The group added that the agreement has the potential to boost intra-African trade by 52 percent, by eliminating import duties.
“This trade could be doubled if non-tariff barriers were also reduced. Africa’s industrial exporters are set to benefit most from the deal. This is important for diversifying Africa’s trade and encouraging a move away from extractive commodities, such as oil & minerals, which have traditionally accounted for most of Africa’s exports. The AfCFTA also presents an opportunity for entrepreneurs to explore new markets and build new partnerships,” said Mashora.
It also noted that lower oil prices and COVID-19 continue to take a toll in countries in the region, and globally, with some cautious optimisim with the rollout of the vaccine against the virus.
The outlook for oil-exporters remains uncertain and government budgets are still strained under the pandemic, according to Mashora.
It added that among the key challenges in the Middle East and Africa are rising sovereign debts and unemployment rates.