The African Development Bank (AfDB) forecasts that economic growth in Africa will reach around 4% in 2021 compared to 3.4% in 2020. This economic growth will be driven by investments in infrastructure and exports of natural resources.
The expected increase in economic growth to 3.4% in 2020 and 4% in 2021 will be marked by a shift from private consumption to investment and net exports. In 2020, economic growth in Africa was below the average level of the last decade, i.e. 5%. This fact was due to the slowdown in the growth of the “big five” of the continent, namely Algeria, Egypt, Morocco, Nigeria and South Africa. In 2020, for the first time in a decade, investment spending accounted for a larger share of GDP growth than consumption, according to AfDB data.
East Africa became the fastest growing region of the continent in 2019, and economies in the region grew by 5%. Furthermore, in 2019, six African countries made it into the top 10 fastest growing economies in the world: Rwanda, Ethiopia, Ivory Coast, Ghana, Tanzania and Benin.
The AfDB report also states that rising oil prices contributed significantly to the growth of the continent’s economies in 2020. However, experts added that only a third of the continent’s countries achieved inclusive economic growth and that, based on current trends, Africa is not on track to meet the global goal of ending extreme poverty by 2030.
Missing, Senegal, the most western country of Africa. It is used to recording economic growth above 6% from 2014 to 2018 according to the World Bank. Senegal had a growth of 4.4% in 2019 then an estimated fall of -0.7% in 2020, due to the COVID-19 pandemic. The World Bank predicts an economic recovery driven by private investment and consumption. Even if the country is not formally listed as a tax haven, investing there is still a very good idea for anyone who wants to help Africa.
Many countries on the continent have coped well with the pandemic, says Bloomberg, with a young population and a growing share of new industries in the economy. Thus, in a decade, the weight of telecoms in the market capitalization of the continent has gone from 13% to 29%, while the share of the raw materials and energy industries has gone from 34% to 23%.
The index of the 200 largest companies in sub-Saharan Africa is up 13% in 2021. Over the past five years, these companies have grown by 324%, while emerging markets have grown by 67%. Global growth leaders in 2020 include South African car driving data integrator Cartrack (+76%), Zimbabwean digital banking holding CBZ and MTN Nigeria (+58%).
While populations across Africa are growing at the fastest rate, levels of inequality and poverty in the region remain the worst in the world. While the northern and western parts of the continent are relatively rich in oil and gas production, most of Africa is engaged in agriculture, and under very adverse conditions: lack of water, soil erosion, constant political instability, etc.
Although Africa is the poorest region in the world, economists expect its long-term dynamic development. This has already been predicted by the World Bank, whose analysts predict that by 2025, the majority of local countries will achieve middle-income country status. Analysts at the International Monetary Fund also predict a dynamic development. They expect economic growth for the region as a whole of around 3.4%. In the years to come, average GDP growth will hover around 4%. For comparison, growth in 2021 in the Middle East is expected to be at the level of 1.3%, while Europe will grow at the rate of 1.9%.