The IMF economic outlook presents a picture of what to expect from each economy or region annually. For Sub-Saharan Africa (SSA) in 2019, a GDP growth rate of 3.4% is projected at the aggregate level; a slight improvement over the 2.9% actual growth rate of 2018. Poor performance in the three big economies (Angola, Nigeria and South Africa) continues to weigh down the overall economic position of the region. Thus, when excluded, the growth projection for the rest of SSA rises above 5% since eighteen out of forty-five countries are anticipated to grow at five% or higher in 2019. Over the last few years, countries like Cote d’Ivoire, Ethiopia, Rwanda, Ghana, and Tanzania have consistently exceeded the region’s average GDP growth rate.
Sub-Saharan Africa has continued to recover from the commodities market crash that brought its GDP growth rate down to 1.4% in 2016; its lowest level in decades. This growth pattern is influenced by a combination of factors which include improved global economy, increased public investment, strong agricultural production, relatively stable political environment across the continent and more. Improvements in policy frameworks and economic reforms also played an important role in the progress recorded. World Bank Doing Business 2019 reported that one out of three of all business regulatory improvements captured between June 2017 and May 2018 were in SSA. Sub-Saharan Africa has been the region with the highest number of reforms every year in the last seven years.
Although the Doing Business annual report is not the only measure of a country’s competitiveness since it is limited in scope and does not take into account other key market determinants such as market size, macroeconomic conditions, foreign investment, security and political stability. However, it provides valuable information to market players about government’s willingness and efforts to create a conducive marketplace for business.
The private sector, especially the service industry, is the largest beneficiary of the improved business environment contributing more than half of the region’s economic output. The service sector has played a more prominent role with an average growth rate of more than 6% over the last ten years. The region’s growth trend is expected to continue at least in the short and medium term. It is estimated that Africa will have over 160 million people in the middle class by 2030. Transition to middle class will be powered by a huge base of young and working age population which is growing at the rate of 1.7 million per month according to the IFC. Africa offers enormous business and investment opportunities in many sectors including transportation, information and communication technology (ICT), housing and education.
While the region has returned to a path of economic growth, certain conditions can threaten the realisation of those projections on the long term – slow growth rate, high debt levels and upcoming elections. The current aggregate GDP growth rate is not strong enough to absorb any sudden economic shock or deliver rapid economic transformation across the continent. Escalating debt levels is very concerning as they pose serious risks to the region. Also, critical elections to watch include Nigeria, Senegal, Mozambique, South Africa, Botswana, Malawi and Namibia. Political situation in SSA has been relatively stable but fragile. Power shifts sometimes come with policy reversals; this can erode investors’ confidence in the market and adversely affect economic growth. Nevertheless, Africa remains a key destination for growth and market expansion. Global Trade Magazine