TOP FASTEST GROWING AFRICAN ECONOMIES IN 2018

Omolola Lipede
20% Complete
 30-May-2018

The year 2018 has been forecasted to be a promising one for the African countries with an economic growth outlook in the region projected to continue to rise to 3.2 percent. The growth is likewise forecasted to increase to 3.5 percent in 2019, on the back of firming commodity prices and gradually strengthening domestic demand, according to World Bank Reports. The Brookings Institution points out in its Foresight Africa 2018 report that half of Sub-Saharan African economies will grow at a rate similar or higher than the years of the ‘Africa rising’, which was the run-up to the commodity price cash of 2004.

GHANA

Ghana, a West African country that shares borders with Togo, Cote d’Ivoire and Burkina Faso, sits on the Atlantic Ocean and has a population of about 29.6 million (2018). According to a World Bank report, the Ghana macroeconomic performance improved in 2017 after a turbulent 2016. The country’s economy expanded in September 2017, at a rate almost double that of 2016. The Ghana Economic Update reported that the service sector bounced back and the fiscal consolidation is paying off. The inflation rate has declined to 10 percent. The report also predicts a continuous fall in inflation within or close to the Bank of Ghana’s medium term target range of 6-10 percent in 2018.

The fiscal deficit dropped to 6 percent of gross domestic product (GDP) in 2017 from 9.3 percent in 2016, this was achieved because of serious fiscal consolidation efforts. It was predicted that the fiscal deficit could fall within the government’s target of below 5 percent of GDP from 2018 onwards. The West African country is expected to see a 8.3 percent growth rate in 2018.

 

Despite the promising outlook, the country still has some challenges it has to solve to sustain. Restrengthening the falling Agriculture sector which provides 750 jobs for every additional $1 million outputs. However, the progress of the sector is retarding overtime. The country has to improve the financial sector to control the expenditure incurred in the country and like get involved in domestic resource mobilisation.

ETHIOPIA

The country is one the second fastest growing economies in Africa and likewise the second most populous country in the continent. It’s economy is a mixed and transition economy with a large public sector. However, Ethiopia is gradually moving towards market economy because it is in the process of privatising many of the state-owned businesses. The landlocked country shares borders with Eritrea, Somalia, Kenya, South Sudan and Sudan. Its main port is in neighbouring Djibouti.

According to an official statistics, the country’s gross domestic product (GDP) was estimated to be 10.86 percent in 2017. The expansion in the economic growth was as a result of the expansion in some sectors which include: agriculture, construction and services. The manufacturing sector likewise experienced growth, with the private and public consumption also playing an important role.

Ethiopia’’s main challenges are sustaining its positive economic growth and accelerating poverty reduction which requires progress in job creation and improved governance.

COTE D’IVOIRE

The economy is stable and currently growing, in the aftermath of political instability in recent decades. The economy is majorly market based and relies on agriculture for its economic growth. Although, the country experienced a severe political unrest that hampered the growth of the economy, the stability has been restored in 2015. From 2016 and the early months of 2017, the country’s economic growth ranked among the most robust in the continent.

Despite the growth however, the economy still wallows a in high rate of inequality. The government must ensure redistribution of income to the most vulnerable sections of the country. The government also needs to diversify the economy from mainly cocoa to adding value to the cocoa produce.

SENEGAL

Senegal is a West African country bordered by Mauritania in the north, Mali to the east, Guinea to the southeast and Guinea-Bissau to the southwest. The population is over 15.4 million (2016). About a quarter of the population is concentrated around the capital of Dakar and up to half in urban areas. The country is one of West Africa’s key economic hubs. The primary sector of the economy is the most dynamic, growing over 7 percent, yet, the secondary sector is also picking up and expected to take the lead in a few years’ time. The budget deficit is expected to drop from 3.7 percent in 2017 to 3 percent in 2018, the current account balance is projected to drop to 5.2 percent in 2018. The improvements are achieved because of large exports, especially of phosphate, peanuts and zircon.

The public debt acquired by the country has increased though, at a slower pace. It increased to 60.8 percent of the GDP in 2017, while debt servicing also increased from 24 to 30 percent of government revenues between 2014 and 2017. According to the Debt Sustainability Analysis carried out by International Monetary Funds (IMF) and World Bank, the public debt of the country remains at low risk of distress, although, this may be problematic if debt indicators worsen.

TANZANIA

An East African country known for its vast wilderness, Tanzania has a population of about 55.57 (2016). It borders Kenya and Uganda to the North, Rwanda, Burundi and the Democratic Republic of Congo to the West, Zambia, Malawi and Mozambique to the South and the Indian Ocean to the East. The Africa’s highest mountain, Mount Kilimanjaro is in the northern-eastern part of Tanzania. The economic growth of the country has declined since the last quarter of 2016; the estimated growth of 2017 was 6.5 percent. Construction, mining, transport and communications were key growth drivers in 2017.

Tanzania has largely completed its transition to a market economy, though the government retains a presence in sectors such as telecommunications, banking, energy, and mining. The economy depends on agriculture, which accounts for more than one-quarter of GDP, provides 85% of exports, and employs about 65% of the workforce.

The fiscal deficit is forecasted to expand slightly in 2018 to 4.4 percent of GDP. The public debt of the country is sustainable, the debt servicing has increased in recent years, reducing the fiscal space. In 2017, inflation rate was 5.3 percent and it is projected to remain around 5 percent through 2019.

The countries listed above are the fastest growing economies in Africa, though not fully developed, they are progressing and emerging. So, investors can consider these countries for business.

The graph representation above is the 2018 forecast of these economies according to World Bank Reports.

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