Bad news in Nigeria and South Africa

November was a pretty bad month for both Nigeria and South Africa, Sub-Saharan Africa’s two largest economies. Economic growth in Nigeria remained very weak in Q3, and entirely dependent on the recent increase in oil output. Despite the government’s promise to rebalance the economy, non-oil sectors actually contracted last quarter. More timely data suggest that the economy struggled going into Q4. In South Africa, attention focused on the country’s latest credit ratings downgrade. S&P’s decision to cut its rating of South African local currency debt came after the country’s finance minister significantly increased his estimate of the fiscal deficit over the coming years. We doubt that the cut will have much of an impact on the economy or on local financial markets, but it has probably delivered yet another hit to confidence.