African Nations Tops List Of Economic Growth Spots in 2024

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As the year 2024 kicks in, things seem to not be looking good for Africa as it is already facing economic headwinds; however, some of the continent’s brightest sparks are putting it in a more hopeful light.

According to the International Monetary Fund, six of the top-10 performing economies in 2024 in the world are predicted to come from Sub-Saharan Africa. Although being small in size won’t be enough to make up for less-stellar performances by South Africa and Nigeria, which together account for two-fifths of Africa’s $2 trillion economy, but notwithstanding, they are helping to make a difference collectively in a region that remains severely challenged by poverty and inequality.

These countries are: Ivory Coast at 6.6% and Tanzania at 6.1%. They have succeeded in diversifying their economies and attracting foreign investment; making the IMF to foresee regional growth improving moderately to 4% in 2024 from 3.3% in 2023. The IMF also foresees growth in Nigeria picking up to about 3% both this year and next, while South Africa is projected to expand by 1.8% and 1.6% over the two years, coming from a tepid 0.9% in 2023.

“Big picture Africa, the external environment is difficult, but reforms matter, and this will be the crux of the growth turnaround that we expect in both South Africa and Nigeria.” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered Bank.

While the Nigerian President Bola Tinubu embarked on aggressive measures to relax the country’s foreign-exchange regime and remove costly fuel subsidies as soon as he came into office, South Africa, on the other hand, hobbled by an energy crisis, is finally making tentative progress in boosting electricity supply, which is expected to continue.

“The important point for South Africa is that we’ve probably reached the turning point,” said Khan. “The years ahead should deliver faster growth. And that is under-appreciated.”

Still, analysts remain aware of Africa’s outlook in the immediate future. The pick-up in growth is coming from a low base after the setbacks the nations suffered during the pandemic; putting strains on public finances and leaving many countries struggling with heavy debt burdens.

The situation described above has already triggered defaults in Ghana, Zambia and Ethiopia, with the IMF warning that other nations are still at risk, and access to foreign capital markets is effectively closed. No African country has tapped into the eurobond market ever since the US Federal Reserve began raising interest rates aggressively in 2022.

Analysts are not optimistic either as they don’t see market access reopening for most African sovereign issuers this year; unless the Fed cuts interest rates aggressively, which may help bring borrowing costs down to a more affordable rate.

“A lot of these countries, despite the recent rally, are still locked out of the market. They’re having to find new ways, as their debt comes due, to roll that over to make good on their obligations,” said Patrick Curran, senior economist at Tellimer Ltd. “Countries especially in Africa but in frontier markets generally, are going to be particularly vulnerable as long as interest rates stay near current levels.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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