Sub-Saharan Africa: a region poised for growth
With this report we introduce our Sub-Saharan Africa service.
Africa is a continent emerging from the shadows in terms of the global economy, with opportunities created by the inevitable expansion of global trade and investment. With a combined GDP of $1.6 trillion in 2021, the continent has 54 countries and five regions – East, Central, North, West, and Southern Africa. Of these 54 countries, 46 are classified by the United Nations Development Program (UNDP) as Sub-Saharan Africa. That geography (which excludes North Africa) is the focus of this service, specifically the following countries—Nigeria, Ghana, Kenya, Angola and Zambia.
There is optimism about recovery and economic resilience for African economies. Some risks to such optimism exist, however. They include increasing risk of debt default coupled with the appreciating US dollar and tightening of monetary conditions globally. The ever-present dependence on primary commodities that have little-to-no added value as exports also remain a risk. Risks of the effect of low COVID-19 vaccination rates (26%) leading to more variants, and geopolitical tensions' further disrupting global supply chains and commodity markets still exist.
In this report, we give an overview of the Sub-Saharan region as a whole and summarize the major issues in our countries of coverage. These issues include:
* The Nigerian presidential election has concluded, with the incumbent All Progressives Congress (APC) party holding on to power in the person of Bola Ahmed Tinubu. The incoming government faces difficult decisions over essential fiscal reforms including rising fiscal deficits, the continental petrol subsidy, debt and revenue generation crisis, and high unemployment. The level of political will it displays in dealing with these multiple crises will have important implications for the trajectory of the Nigerian economy in the short and medium term.
* Ghana has remained economically embattled for the past three years since the COVID-19 crisis, with hyperinflation, foreign exchange scarcity, currency devaluation of the Ghanaian cedi, and a sovereign debt crisis with $58 billion of debt. The country’s fiscal officials are working with bilateral creditors—to whom Ghana owes $.5.5 billion—to achieve debt relief and unlock a $3 billion IMF loan package agreed last year. Seeking to shift to a digitally driven economy, Ghana has recently joined the Digital Cooperation Organization, and plans initiatives such as national ID issuance, digital address systems, and land records digitization.
* After its tourism-dependent economy was hit hard by the COVID-19 pandemic, Kenya’s economy is projected to grow by 5.5% in 2023 and 6% over the medium term. Newly elected President William Ruto is exploring tax breaks to lure Western foreign investors. The East African country, however, is currently dealing with a foreign exchange reserves shortage which has led to fuel shortages.
* There is a push to make English the official language of Angola in hopes of spurring on the economy. This is due to the correlation between a population's English skills and economic performance. Angola’s President Joao Lourenco supported Japanese private investment in the energy, tourism, mining, agriculture, and pharmaceutical industries during his four-day state visit to Japan.
* The election of the opposition politician Hakainde Hichilema in mid-2021 created increased confidence in Zambia’s economy as Hichilema implemented sensible economic reforms. The IMF has praised Zambia’s economic reforms but says its disbursement of an agreed $188 million loan will depend on debt relief agreement with bilateral creditors.
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