Africa Overview

The African Economy Snapshot is designed to give business executives, investors and operators as well as other practitioners a quick and accessible look at developments in Africa’s economy.

Africa is the second largest and most populated continent with a total population of 1.34 billion inhabitants. It covers 30 million square kilometers and has a total GDP of $2.6 trillion (Nominal, 2019) and $6.7 trillion (PPP, 2019). Africa is composed of 54 countries categorized into five major regions. It is a rich conflation of cultures, traditions, and languages. Africa possesses abundant natural resources, the youngest population on the planet and a diverse climate.

African economies present diverse opportunities across sectors such as agriculture, banking, consumer goods, infrastructure, mining, oil and gas, and telecommunications. Africa’s growth prospects are bright, but they differ not only country by country but also sector by sector. Traditional sectors such as agriculture, mining, and oil and gas continue to be areas of opportunity given that the continent has more than one-quarter of the world’s arable land and that eleven of its countries rank among the top ten sources for at least one major mineral. Newer sectors such as banking and telecommunications are also making significant headway with remarkable investments being made in expanding infrastructure. Furthermore, in March of 2018, the continent made a significant stride towards realizing the long-held dream of a united continent by establishing the African Continental Free Trade Area (AfCFTA) to increase continental trade and integration.

The COVID-19 pandemic, which wreaked havoc all over the world, had a major impact on Africans and the continent’s economic development. Despite having a lesser impact on the African continent than other regions, the Corona virus caused tens of thousands of deaths in Africa. The pandemic also had a detrimental impact on African economies causing its debt crisis to worsen and the trading under the AfCFTA to be delayed. In 2020, real GDP in Africa contracted by 2.1% (African Economic Outlook 2021). This is a marked improvement over the extraordinary contraction of 2019 but nonetheless represents the slowest recovery in the world. This recovery, currently fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade, remains weak.

Another challenge that the continent faces relates to security, political instability, and peace building. With several conflicts spreading or intensifying and violent extremism growing, African governments are faced with the difficult task of enduring safety and security not only for the sake of their citizens but that of the economy and future growth. The decline in democratic governance has only exacerbated this problem. The erosion of term limits in several countries in Africa, including constitutional amendments in Côte d’Ivoire and Guinea, contested elections in Tanzania, and military coups in Mali, Sudan, Chad, Guinea were all troubling developments. By the same token, some ten African countries held presidential or general elections and took steps to strengthen democracy, as highlighted by peaceful transitions of power in Ghana and Niger, and the annulment of a flawed election in Malawi.

Africa is both a place of great challenges and even greater opportunities and Africans remain determined to ensure the growth and development of their economies and communities.

Northern Africa Overview

North Africa is an economically prosperous area, generating one-third of Africa’s total GDP. The countries of North Africa are Algeria, Egypt, Libya, Mauritania, Morocco, Tunisia.

According to Statista Research and Analysis, the coronavirus (COVID-19) pandemic impacted economic growth in North Africa. Projections conducted in December 2020 showed that the economy would recover in 2021 and 2022 with the real GDP of each country growing significantly. According to the African Development Bank, in 2020, North African economies experienced three shocks: the Covid-19 pandemic, a collapse in oil prices and a steep drop in tourism. Growth was also cut short due, in part, to sharp contractions in the region’s main trading partners. This output loss was found to be less severe than projected on account of prompt interventions by governments to mitigate the impacts of the pandemic.

Fitch Solution predicts strong investment and exports of goods and services will drive a pickup in Egypt’s real GDP growth from 3.3% in FY2020/21 to 5.4% in FY2021/22. In Morocco Fitch Solution forecasts current account deficit will narrow in 2022 on the back of, a rebound in tourism as border restrictions loosen up and continued sizeable remittance inflows. In Tunisia, a sluggish recovery in international tourism, relatively high unemployment levels and fiscal consolidation efforts is feared to prevent consumer spending from making a more pronounced recovery over 2022. In 2019, for the second year in a row, North Africa was the second-best performing region in Africa with a growth rate estimated at 3.7 percent.

North African Economy Snapshot

Western African Economy Snapshot

Western Africa Overview

The West Africa region consists of 16 countries, most of whom are members of the Economic Community of West African States (ECOWAS). The 16 countries are Benin, Burkina Faso, Cape Verde, Côte D’Ivoire, the Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.

Overall economic growth in West Africa was projected to be at 3.6 percent in 2019 and 2020, boosted by the recovery of commodity prices and improved production and service sectors in the region. West Africa’s collective GDP has risen from $105bn to more than $659bn from 2000 to 2020. The largest economies in the region – Nigeria, Ghana, and Côte d’Ivoire – accounted one-quarter of Africa’s GDP in 2020. The region’s economies are very diversified as reflected in their per capita incomes ranging from $452 in Niger to $3,678 in Cabo Verde (2018). Nine countries saw growth of at least 5.0 percent in 2017 and 2018. In 2020 Nigeria, Africa’s largest economy has come out of recession and its dominance in the region continues to impact its neighbors and the economic performance of the entire region.

According to AfDB’s Africa Economic Outlook 2020, countries belonging to the West Africa Economic and Monetary Union (WAEMU, namely Benin, Burkina Faso, Côte D’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo) smoothly transited from the harshest shocks of the global economic climate on their domestic prices and enjoyed relatively low levels of inflation, non-WAEMU countries Cabo Verde, Gambia, Ghana, Guinea,Liberia, Mauritania, Nigeria, and Sierra Leone continue to struggle with high inflation and rising external debt, according to the report.>

Central Africa Overview

At the heart of the African continent, Central Africa is a diverse area that is loosely and unevenly integrated. The region is made up of nine countries: Burundi, Cameroon, Central African Republic, Chad, Congo Republic – Brazzaville, Democratic Republic of Congo, Equatorial Guinea, Gabon, and São Tomé & Principe.

Oil is the main export from the Central African countries to the EU (41%). Other main regional exports are copper, wood, cocoa, bananas, and diamonds. Its geographic location in the center of the continent coupled with its diverse natural resources make Central Africa an ideal area for trade with all the other regions in Africa. Central Africa boasts huge natural resources such as hydrocarbons (oil and gas) and minerals (diamond, copper, iron, manganese, cobalt, etc.), which make it one of the richest regions of the continent.

Central African governments introduced several socioeconomic measures after COVID-19 first surfaced. CEMAC countries and the Democratic Republic of Congo enacted stimulus measures equivalent to several percentage points of GDP, combining tax relief and liquidity injections with spending for public health measures and social sectors.

According to the AfDB, the regional outlook remains favorable for a post-COVID recovery. Countries are expected to rebound to average 3.3 percent GDP growth in 2021, mostly thanks to higher oil prices. Successful containment and the global recovery have helped revive activity in CEMAC countries. The main risks remain new variants of the coronavirus, slow vaccination rollouts, and security issues—especially in Cameroon, the Central African Republic, Chad, and the Democratic Republic of Congo.

Central Africa Economy Snapshot

Eastern African Economy Snapshot

Eastern Africa Overview

The East Africa region consists of 14 countries with overlapping memberships in various regional economic communities such as the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), the Intergovernmental Authority on Development (IGAD), and the Southern African Development Community (SADC). The 14 countries are Comoros, Djibouti, Ethiopia, Eritrea, Kenya, Madagascar, Mauritius, Rwanda, Seychelles, Somalia, South Sudan, Sudan, Tanzania, and Uganda. According to the African Development Bank, East Africa has been the continent’s fastest-growing region in recent years. It is home to several of the fastest-growing economies, including Ethiopia, Djibouti, Kenya, Rwanda, Tanzania, and Uganda. The region’s growth rate averaged 4.9% in 2018 and 5.3% in 2019, compared with 3.3% and 3.4% in Africa overall. However, because of the Covid-19 pandemic, the region’s growth rate fell to 0.7% in 2020, but remained well above Africa’s overall slump of -2.1%, making the region the only one in Africa to have avoided a recession amidst the pandemic. East Africa’s resilience in 2020 was anchored by positive economic growth rates in Ethiopia, Tanzania, Kenya and Djibouti, supported by a more diversified service sector, sustained public spending on large infrastructure projects and a good performance in agriculture, despite desert locust invasions and other natural disasters such as droughts and floods. The Borgen Report indicates that in 2019, East African Foreign Direct Investment (FDI) inflow to $11.5 billion in just a year. This 103% increase is largely due to China as East Africa’s largest investor. Chinese investment accounts for almost 60% of FDI inflow in East Africa. Investment is going into the technology, manufacturing, and services sectors. FDI inflows created 89,877 jobs in 2018 and 211,084 in 2019 in countries such as Uganda, Tanzania, Rwanda, Kenya, Burundi, and South Sudan.

Southern Africa Overview

The region is made up of 10 countries and they are: Angola, Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Zambia and Zimbabwe who are members of the Southern African Development Community (SADC). This region boasts one of the top GDPs and its members have strong economies based mainly on services and industry (including construction). According to the AfDB, economic growth in the region declined to 1.1 percent (from 1.9 percent in 2015) and remained weak across most countries. Madagascar and Mozambique were rare bright spots, posting growth rates above 4 percent, despite a dip in the growth rate in Mozambique (6.6 percent in 2015). Botswana was back on track with real GDP growth of 2.9 percent, after contracting by 0.3 percent in 2015. The region’s dismal economic performance is due mainly to near-zero growth in South Africa (0.4 percent) and lower growth in Angola (1.1 percent compared to 3.0 percent in 2015), two major commodity exporters hit by drought, persistent power outages, and adverse terms-of-trade shocks. One graph shows the entire region but because of South Africa’s size, the other countries are dwarfed, and we can’t see the breakdown. The second shows the region without SA and breakdown is clearer. I suggest keeping both and making a note of this.

Southern Africa Economy Snapshot