Sub Saharan Africa, home to more than 1 billion people, half of whom will be under 25 years old by 2050, is a diverse continent offering human and natural resources that have the potential to yield inclusive growth and eradicate poverty in the region, enabling Africans across the continent to live healthier and more prosperous lives. With the world’s largest free trade area and a 1.2 billion person market, the continent is creating an entirely new development path, harnessing the potential of its resources and people.
The region is composed of low, lower-middle, upper-middle, and high-income countries, 20 of which are fragile or conflict-affected. Africa also has 13 small states, characterized by a small population, limited human capital, and a confined land area.
Listed below are the fastest growing economies in Africa:
- South Africa
The economic impact of the COVID 19 shock in Sub-Saharan Africa is severe. However, countries in the region are continuing to weather the storm. Economic activity in Sub-Saharan Africa is estimated to have contracted by 2 percent in 2020, reflecting a slower than an expected spread of the virus and lower COVID 19 related mortality in the region, strong agricultural growth, and a faster than expected recovery in commodity prices.
Nevertheless, COVID 19 has plunged the region into its first recession in over 25 years, with activity contracting by nearly 5 on a per capita basis. It has also exacerbated public debt vulnerabilities, percent of which are high and continue to rise in many countries. Vulnerable groups, such as the poor, informal sector workers, women, and youth, suffered disproportionately from reduced opportunities and unequal access to social safety nets. This situation could push up to 40 million people into extreme poverty, erasing at least five years of progress in fighting poverty.
In East and Southern Africa, the growth contraction in 2020 is estimated at minus 3 percent, 0.9 percentage points less than projected in October 2020, mostly driven by South Africa and Angola its two largest economies.
Disruptions in the tourism industry and lockdowns caused substantial slowdowns in Botswana, Namibia, Madagascar, and the island nations. Mining-dependent economies such as Mozambique and Zambia continued to experience output contractions in the second half of 2020. Growth in Western and Central Africa contracted by 1.1 percent in 2020, less than projected in October 2020 partly due to a less severe contraction in Nigeria, the subregion’s largest economy, in the second half of the year. Real gross domestic product in the subregion is projected to grow by 2.1 percent in 2021 and 3.0 percent in 2022. Fragile countries in the region are expected to experience a strong decline in growth as COVID 19 exacerbates the drivers of fragility.
Fastest Growing Economies In Africa 2022
Sub-Saharan Africa’s recovery is expected to be multi-speed, with significant variation across countries. Nigeria, South Africa, and Angola, the region’s three largest economies, are expected to return to growth in 2021, partly owing to higher commodity prices, but the recovery will remain sluggish. Growth is projected to rebound to 1.4 percent in Nigeria, 3 percent in South Africa, and 0.9 percent in Angola. Muted near-term growth prospects and slow vaccine rollout in the largest economies will weigh on the region’s outlook. Excluding Nigeria, South Africa, and Angola, activity is projected to expand at a more solid pace in the rest of the region with non-resource-intensive countries such as Côte d’Ivoire and Kenya, and mining dependent economies, such as Botswana and Guinea, are expected to see robust growth in 2021 driven by a rebound in private consumption and investment as confidence strengthens and exports increase.
Faster progress on vaccine deployment along with credible policies to stimulate private investment would accelerate growth to 3.4 percent in 2021 and 4.5 percent in 2022 in Sub-Saharan Africa. Alleviating the debt burden will release resources for public investment in areas such as education, health, and infrastructure. Investments in human capital will help lower the risk of long-lasting damage from the pandemic, which may become apparent over the longer term, and can enhance competitiveness and productivity.
The next 12 months will be a critical period for leveraging the African Continental Free Trade Area, to deepen African countries’ integration into regional and global value chains. Reforms that deliver reliable electricity, including better functioning of public utilities, can power the manufacturing sector and the digital economy. Finally, reforms that address digital infrastructure gaps and make the digital economy more inclusive ensuring affordability and building skills for all segments of society are critical for improving connectivity, boosting digital technology adoption, and generating more and better jobs for men and women.
Morocco, Kenya, Ghana, Egypt and South Africa, are currently the fastest-growing major economies in Africa.
Having witnessed its worst recession in half a century in 2020, Africa’s economy is forecast to grow at a healthy pace of 3.8 percent in 2021 driven by rising global demand as restrictions are eased, untapped market opportunities, a rebound in commodity prices, and a rise in oil prices. Leading data and analytics company GlobalData notes that the fastest-growing economies in the region will be Morocco, Kenya, Ghana, Egypt, and South Africa, which are all forecast to register above 4 percent real GDP growth in 2021.
According to Gargi Rao, Economic Research Analyst at GlobalData:
Morocco has been moving ahead in leaps and bounds in recent years and has provided the world with produce following promising agricultural seasons. The country’s expected growth of 5.19 percent was also influenced by its effective vaccination drive, accommodative monetary policies, and fiscal stimuli.
Rao continues: Strong banking fundamentals and a rise in external demand for commodities are expected to help recovery in South Africa, which is predicted to see 4.09 percent growth. However, this has been hampered by recent protests in the country. Private consumption growth is to remain the major driver of economic growth in Egypt.
Africa’s largest economy by GDP, Nigeria, is also forecasted to exit recession, but growth will be at a slower pace than other sub-Saharan African nations at 2.3 percent. Heightened insecurity, rising food inflation, rising debt service payments, and stalled reforms are major roadblocks to Nigeria’s recovery process.
Rao added: Significant currency depreciations have occurred in many African countries due to a fall in external financial flows, portfolio investments, and a rise in public debt. This may cast a shadow on recovery. However, governments’ focus on counter-cyclical easy monetary policies and fiscal stimulus packages will aid the African region’s economic recovery in 2021.
In addition to government support, Africa is attracting global investors due to its vast resource base and untapped market options. Recently the UK pledged to invest 4.5 Billion Dollars in Africa by 2022, which is expected to create jobs and accelerate economic activities.
FDI inflows declined by 20 percent in the African region in 2020 due to subdued commodity prices and pessimistic investor sentiment amid the COVID 19 pandemic. However, untapped markets and structural transformation are likely to speed up the momentum in FDI flows in the coming years. With an increase in energy demand anticipated, resource-seeking investments may increase in H2 2021. The importance of regional value chains and full implementation of African continental free trade agreements will create new opportunities for African economies.
Rao concludes: The need of the hour is to continue support to health sectors to cope with the resurgence of COVID 19 cases along with sustained fiscal and monetary support. To avoid reversing the progress made on poverty reduction, governments need to expand their social safety nets and make growth inclusive and more equitable. To achieve a faster economic recovery in H2 2021, Africa’s policymakers need to accelerate structural transformation through digitalization, industrialization, and diversification.
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Africa’s policymakers need to accelerate structural transformation through digitalization, industrialization, and diversification. Africa’s economy is forecast to grow at a healthy pace of 3.8 percent in 2021. Morocco, Kenya, Ghana, Egypt and South Africa are to be the fastest-growing economies.
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