The recent rally across almost all commodity prices is good news for resource-rich economies in Sub-Saharan Africa. Balance sheets in oil producing countries like Nigeria and Angola will get a boost from the pick-up in oil prices. And a surge in industrial metals prices will prop up mining revenues in South Africa and Zambia. But alas, it’s not quite that straightforward. While we think that oil prices will rise further in the coming quarters, this is unlikely to be sufficient to fully alleviate balance of payments strains of key producers in the region. What’s more, most other African countries are facing higher oil import bills and inflation pressures. Meanwhile, we suspect that industrial metals prices will drop back later in the year as China’s economy cools, turning a tailwind into a headwind for Zambia and South Africa among others.
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