1. Southern African Energy
Intelligence Brief
Ref.: 339-
Intelligence Brief – Economic growth prospects - SADC Page 1 of 8
Subject Intelligence Brief – Economic Growth Prospects
Date 16 May 2013
Data contained in this brief has been obtained from Business Monitor International
Angola
With an abundance of natural resources, the country has been able to use that to an advantage of
being able to see positive growth over the years 2005-2008. Rich fertility in soil and the favourable
climate conditions conducive for agricultural produce have increased investment opportunities in this
sector/industry. Public investment Infrastructure programmes continue to boost economic
competitiveness. The energy, transportation and construction sectors are all expected to benefit and
improve from the infrastructure programs. The lack of reliable power supply will hamper growth in the
highly energy-intensive manufacturing sector. The country’s electricity infrastructure is largely
inadequate to be able to meet the demands of the economy, thus the government largely welcomes
foreign investment within the energy/power generation sector. Plans are in place by the state to boost
power generation to 7000MW by 2017 – this will be done through the country’s hydropower
generation potential.
As one of the healthiest countries within the region, its labour force poses a positive growth outlook in
the economy.
In achieving good growth levels, there has to be an improvement in human capital and a reform in
the private sector and the financial markets in the country need to be more stringent and deepened.
Botswana
The country has a well-established track record in terms of its prudent economic management
methods. The investments in social services and infrastructure are well vested, such that the
population is at a point of contentment with the political conditions in the country and thus likely to be
very productive. There’s potentially significant international interest in the country because of its good
record in terms of stability. With a welcoming attitude towards foreign investment, the country has
many opportunities, more so recently now that there’s a spur in the privatisation programme. A
continued improvement in the current business environment will further improve Botswana to be an
attractive base for companies that seek to invest in Southern Africa. There’s a stable democracy, low
corruption, investor-friendly laws, legal system that generally upholds commercial rights and the

2. Southern African Energy
Intelligence Brief
Ref.: 339-
Intelligence Brief – Economic growth prospects - SADC Page 2 of 8
government is highly attuned to private enterprise. The government has plans in place to improve
education, infrastructure and health services.
The economy is very much exposed to external factors outside the government’s control – these
could be the downturns in global market conditions, since the country is very much dependent on
global spending (trading). As a landlocked country the economic diversification opportunities are
hampered, thus regional integration will be an impertinent determinant for the country’s growth.
Although the government has reacted positively with its HIV/AIDS policies, there’s still a high level of
prevalence of this pandemic in the population, which could reduce the labour force’s ability to
productive on a global scale.
Concerns are with the skills and development of the labour force in the country, Skill labour still boast
a very short supply. Unemployment is a particular concern among the youth with ages 15-19 at 41.4%
and 34% for ages 20-24, whilst the young age group is much more vulnerable to HIV/AIDS, with the
country’s infection rate at 25%.
Democratic Republic of Congo
One of the richest mineral resourced country, which will see the mining sector flourish over the years.
Besides mining, the agricultural sector will also post robust growth in the country, when it gets much
more stabilised. The government is keen on growing the mining sector, thus looking at ways to
finance infrastructure development in the country.
The country has a lot of dependence on the mining industry so much so that it’s largely the source of
fiscal revenues and accounts for 70% exports, thus making the country very vulnerable to global
swings in commodity prices. Policy uncertainty which hinders investment will deter economic growth,
and recent declining trends in the prices of copper (major export commodity) may not attract
investment. The country’s business environments are not conducive to attract foreign investment.
The presence of the numerous rebel movements in the country which poses a threat to the
government, could likely influence the government institutionalised in the country (due to the citizens
dissatisfaction with the president and cabinet ministers) and will definitely have an impact on the
country’s policies which may very well be strenuous for foreign investors – this decreases the possible
growth in the country’s economy. Structural weaknesses in the Congolese economy and difficult
business environment will result in slow growth in the country. Violence could very well be a
widespread problem in the country if the government continues to fail in its attempts to demonstrate
authority amongst potential rebels.

3. Southern African Energy
Intelligence Brief
Ref.: 339-
Intelligence Brief – Economic growth prospects - SADC Page 3 of 8
Lesotho
Over the medium term Lesotho’s growth will be moderate, underpinned by the good performance of
the mining sector, reconstruction activities (infrastructure) to repair damages caused by floods in
2011. Private sector participation in the economy is challenged by different structural constraints, yet
the sector has a very high potential of alleviating poverty through the creation of employment.
Economic diversification with emphasis in agriculture, industry and mining will help mitigate the
potential risks from the expiration of the WTO concessions (expiration of concessions on textile) and
their impact on the textile industry. Such diversification, together with an improvement in business
environment will attract both domestic investment and Foreign Direct Investment, which will effectively
have a positive impact on economic growth in the med-term. With the private sector being the main
contributor of domestic investment, this further enhances the point that there needs to be an enabling
business environment between private and public sector partnership. Lesotho has a long history of
membership in regional groupings. It is currently a member of the Southern Africa Development
Community (SADC) and Southern African Customs Union (SACU). The country has been very active
in joining new initiatives. Cross border trade plays an important role in improving the social and
economic well-being of border communities by generating employment and incomes to support the
livelihoods of these communities. Cross border trade is sensitive to government policies with respect
to border controls for visa and onerous procedures for customs clearance at the border including
delays due to limited working hours.
Youth unemployment is a critical development challenge in Lesotho. The effort to ease the challenges
of integrating youth into the labour market through the promotion of self-employment led to the
creation of the Youth Employment Promotion Project (YEP). Poverty, which is closely linked to
inequality and unemployment, especially among the youth, and HIV/AIDS will remain the main
challenge to the country’s growth. The country’s competitiveness is largely affected by structural
factors which include high utility costs in particular telecommunications and energy supply shortages.
The overall standard of living is still low. Government is taking measures to improve the efficiency of
the health system. The goal of promoting gender equality and empowerment of women is on track.
Malawi
Malawi’s economic growth has slowed down due to reduced donor inflows which are used by the
government for development, and shortages in essential commodities such as fuel and other inputs in
the manufacturing sector. The government’s new national development plan, the Malawi Growth and
Development Strategy (MGDS II, 2011-2016), identifies nine key priority areas -- Agriculture and Food
Security; Energy, Industrial Development, Mining and Tourism; Transport Infrastructure and the
Nsanje World Inland Port; Public Health, Sanitation, Malaria and HIV and AIDS Management;

4. Southern African Energy
Intelligence Brief
Ref.: 339-
Intelligence Brief – Economic growth prospects - SADC Page 4 of 8
Integrated Rural Development; Education, Science and Technology; Green Belt Irrigation and Water
development; Child and Youth development and Empowerment and; Climate Change Natural
Resources and Environment Management.
The country is making considerable progress in meeting its targets on reducing infant mortality and
combatting HIV, AIDS, Malaria and other diseases. The improvement in the HIV incidence rate
reflects increased awareness of the disease, better reproductive health and child health programs,
improved diagnosis and universal access to treatment. Challenges still remain though with regard to
the high cost of care, shortages of essential supplies and socio-cultural and economic issues.
The prospect is of higher inflation if the government cannot resolve the wider economic problems it
faces. Political context/climate will continue to have an impact on macroeconomic outlook policy
making. Infrastructure limitations, shortages in electricity supply and macroeconomic challenges
continue to slow down growth. Challenges that hinder private sector growth include structural
bottlenecks -- poor infrastructure and inadequate electricity supply -- as well as cumbersome
legislation and weak private sector support institutions
Namibia
With a favourable political risk factor, policy making and implementation is much easier and effective.
The lack of regional or internal security risk, one can be almost certain about the stability of their
investment in the country. Public investment levels are robust, but government has realised that
inward investment and diversification of the economic base is politically important to bring jobs,
expertise and opportunity, thus it is open for foreign investment. With political stability, good economic
management and a welcoming attitude towards foreign investment, the country presents many
investment opportunities, particularly in natural resources. A positive outlook in Namibia is induced by
the government’s long term plan of privatising the state owned companies. As a member of the
Southern African Customs Union, cross-border trade is cost effective, therefore increasing the
potential to trade on a large scale. An improvement in the business environment will make Namibia a
highly favoured country for foreign investment in the Southern Africa region.
Power shortages form a key role in Namibia's electricity market, as domestic energy -generating
capabilities are insufficient to meet demand. The trend in the shortfall of electricity is expected to
continue, and until a new coal-fired power station is completed in 2016 or Kudu Gas, Namibia will
have to continue to turn to expensive energy imports to meet demand.
Overwhelming dominance of the ruling party is likely to reduce government accountability. The labour
unions considerable power in the country, often result in a disruption in production. Significant
population displacement caused by floods, will often lead to unequal social differences, thus inflicting

5. Southern African Energy
Intelligence Brief
Ref.: 339-
Intelligence Brief – Economic growth prospects - SADC Page 5 of 8
all sorts of social difficulties (crime, health, education etc.). Instability in the neighbouring countries,
such as Zimbabwe, will likely increase the number of immigrants in the country which thus poses
further poses a significant impact on social risk.
The country is vulnerable to fluctuating commodity prices, in terms of their energy imports, and also
its major exports.
Tanzania
Tanzania has a reputation as one of the more stable countries in the continent, in terms of its political
systems. With a lot less ethnicity violence, which is prevalent in other countries, living in unity is
achieved and thus a much happier population who contribute positively to the growth of the country.
Unity with other countries in the continent will improve Tanzania’s position in Africa, and thus present
an opportunity for better regional cooperation on economic affairs, which will improve the foreign
affairs. Political stability provides reassurance to foreign investors, especially compared with more
politically volatile neighbours. Several underdeveloped natural resources sector and mining deposits
(gold, diamonds, industrial minerals etc.) make the country an attraction to investors. There’s a
competitive labour force that can be unleashed, if the government can be able to resolve the issue of
basic services and education. Integration with the Eastern African community will provide a large and
attractive market for foreign investors. Tying the country's growth path to the weather is Tanzania's
dependence on hydroelectricity. A sustained drought could cut the electricity supply to the growing
non-agricultural sector, while plentiful rainfall could make power readily available for expanding
operations.
Corruption is a huge problem in the country, with the government reporting that up to 30% of the
budget in the country is lost to graft. The government is reliant on foreign assistance for budget
support, which could easily resort to the government not being able to fulfil their fiscal obligations if
the foreign countries cannot support it anymore (resulting in unhappy citizens). The level of poverty is
high and a large proportion of the population has limited access to education, health and other basic
services. HIV/AIDS is a major threat to Tanzania’s economic future, with about 11% of the adult
population HIV-positive. Estimates show that the country’s GDP could be 15-20% lower by 2015
compared with what it would be without the high infection rate.
Infrastructure bottlenecks in the power sector are a serious constraint to growth and private
investment in Tanzania. Tanzania's power infrastructure has been plagued by inefficiencies and
under-investment for years, both in terms of installed capacity and the transmission and distribution
network. In addition to greater diversification, Tanzania's power sector thus needs a considerable
amount of new investment to meet current and future energy demand; this is expected to grow
rapidly, due to rising population levels and economic growth

6. Southern African Energy
Intelligence Brief
Ref.: 339-
Intelligence Brief – Economic growth prospects - SADC Page 6 of 8
South Africa
Considering the country's high degree of unionisation, the threat of industrial action and disruption to
economic activity is a constant concern. Demands for greater social expenditure and labour
protectionism could undermine South Africa's reform credentials. The country has rich mineral
resources and is the continent's financial hub. The business infrastructure is modern, enabling South
Africa to serve as a financial and business hub of the continent. It has close trading ties with Europe
and can serve as a manufacturing and export hub for both European and Asian markets.
Persistently high levels of poverty have led to political disenfranchisement and the attraction of new
political groupings. Corruption allegations have tainted the party's (the ANC which continues to boast
dominance as the ruling party) image and raised suspicions over its excessive influence over the
judicial system. In terms of land reform, the willing buyer/willing seller principle may be dropped in
order to speed up the process, although a Zimbabwe style 'land grab' (nationalisation) is unlikely –
which if implemented would badly taint the image of the country, and subsequently direct investors
away. South Africa suffers a high prevalence of HIV/AIDS; a nationwide study conducted in 2010
found that 30.2% of pregnant women (aged 15-49) were living with HIV in 2010. This presents social
risks. High levels of HIV/AIDS will reduce long-term growth. Currency volatility over the years has
hampered industry planning. The lack of investment in education under apartheid has left a legacy of
high structural unemployment and poverty, which will take a generation to meaningfully reduce.
HIV/AIDS tends to strike victims during their most economically active years, which will increase
social costs for industry.
Zambia
Economic policy has significantly improved over the last couple of years; key macroeconomic
indicators such as inflation, real GDP growth, fiscal balance and current account balance have
strengthened substantially since 2003. Zambia has large metals reserves and strong potential for
growth in the mining industry. Copper dominates, but the country boasts deposits of iron ore, coal,
uranium and manganese. Investment in key non-mining sectors, especially tourism, has contributed
to high growth. Hydroelectricity accounts for almost all of the electricity generated in Zambia, and this
brings with it considerable risks - particularly in dry years.
Tension between the Zambian population and Chinese investors has risen, with riots and strikes a
frequent occurrence. Corruption remains a major problem, with Transparency International giving the
country a score of only 37 out of 100 in its 2012 Corruption Perceptions Index, ranking the country
88th out of the 176 countries assessed. Zambia is a landlocked country with poor transport
infrastructure, making trade costly and time-consuming. The working population has a low skill base
and high HIV infection.

7. Southern African Energy
Intelligence Brief
Ref.: 339-
Intelligence Brief – Economic growth prospects - SADC Page 7 of 8
Zambia is heavily dependent on its mining sector for foreign income, despite its failed attempts of
diversification. As a result, it remains very vulnerable to the state of the global economy. A major
slowdown in Chinese growth and subdued copper prices could weaken long-term foreign investment
in the country. Single-digit inflation has been difficult to achieve.
Shortfalls in national power supply curtailed copper production in 2007-2008. The impact of irregular
supply has been muted as power demand fell, but this could potentially restrain growth as demand
resurges once again.
Zimbabwe
After more than a decade of economic contraction, Zimbabwe is forecast to register rapid growth over
the coming years. The economy will remain vulnerable over the medium term, given the dependence
on political stability. Any future democratic government will have to welcome foreign investors. The
new government (“shared-power”) is gradually re-engaging with the international development
community. The country has abundant natural resources and a relatively developed whilst dilapidated
infrastructure. Once stabilised, there could be substantial inflows of FDI, particularly from South
Africa. In the future, Zimbabwe’s trade with its neighbours is expected to expand significantly.
Zimbabwe has the potential to have a relatively stable power market, with electricity generating
capacity spread across many sources of power: coal- and oil-fired power stations and hydroelectricity.
The potential for domestic political violence still remains high. Living standards have plummeted and,
according to estimates, unemployment is as high as 80% – meaning that domestic demand is very
weak. Years of underinvestment mean that the country's power stations are now out-dated and
unreliable, meaning power outages are a regular occurrence. Both the public and private sector are
starved of financial resources and this is constraining Zimbabwe’s economic recovery. Government
organs and large segments of business are controlled by politicians and are in a position to disrupt
attempts at reform for some time. Publication of a set of indigenisation laws that require all
businesses to be majority Zimbabwean-owned risks scaring off foreign investors. Many skilled
workers and professionals have emigrated, and an HIV/AIDS infection rate estimated at 25% is
further reducing the skills endowment. There is deep uncertainty about how long the country’s political
woes will persist. As a result, business planning for the future is extremely difficult. More
expropriations and restrictions on commerce are quite possible, with the energy, transport, retail and
mining sectors all possible targets. The business environment will remain challenging due to death of
skills, infrastructure deficiencies etc.

8. Southern African Energy
Intelligence Brief
Ref.: 339-
Intelligence Brief – Economic growth prospects - SADC Page 8 of 8