Six-on-Six: Six African Economies Expected to Grow By at Least 6% This Year
Sub-Saharan Africa’s expected GDP growth rate for 2016 has been reassessed to 3% — a decline from the 5-7% range recorded over the past 10years. However, it’s not all bad news…here’s a quick look at six countries in the region expected to grow by at least 6% this year.
Côte d’Ivoire (8.5% growth)
The largest economy in French-speaking West Africa, Côte d’Ivoire has bounced back to relative peace and an economic boom after nearly a decade of stagnation and political instability. The country has made strides in shoring up its infrastructure, recording increased business activity and attracting multinationals such as fast-food chain Burger King and French retailers Carrefour and Fnac.
Economic growth in 2016 is expected to result from greater investment in basic infrastructure, housing and the agro-business industry (cocoa, rice and cashew nut processing).
On the flip side, Côte d’Ivoire still faces some risks: adverse weather could reduce agricultural output and there is the potential unavailability of financing from international capital markets as a result of volatile global financial conditions.
East Africa’s second-largest economy has several advantages, including a population of nearly 50 million, rising income levels, vast natural resources, and high foreign direct investment (FDI) inflows. Lately, the country has been making news headlines for its strong efforts to fight corruption and rein in public expenditure.
Hurdles to overcome include under-developed infrastructure, limited agricultural productivity and value addition, and the task of managing urbanisation.
In third place is Senegal; slipping from the #2 spot last year. In 2015, Senegal was the second-fastest growing economy in West Africa, behind Côte d’Ivoire. The World Bank attributes its 6.5% growth – the highest since 2003 – to public investment, lower energy and transport prices, as well as good performances in the services, chemical, construction and agricultural sectors. However, the World Bank advises that there is a need for more investment in horticulture, mining, telecommunications and manufacturing.
Rwanda anticipates a 6.3% GDP increase this year. Last year, activity in agriculture, construction, and services played key roles in economic growth. Of concern, however, is the declining demand in export markets and fluctuations in aid flows. The local private sector is also largely informal.
Rwanda also struggles with inadequate electricity and infrastructure. However, several initiatives by the public and private sector are in place to address them positioning Rwanda as a hub for most business activities within the region.
Kenya’s profile has been rising in the past few years so it’s no surprise that Kenya makes it onto this list. Improving infrastructure, strong consumer demand, innovation, growth in the private sector and relative political stability are some of the good things going for Kenya.
Despite these, the World Bank believes Kenya’s goal to become an upper-middle-income country by 2030 is an ambitious target. Why? The World Bank cites the country’s low productivity in the manufacturing and agriculture sectors, overregulation, corruption, a large informal economy, and constraints in the energy and transport sectors as key hurdles to faster growth.
This African nation has enjoyed rapid economic expansion over the past decade, partly driven by public spending and FDI (foreign direct investment) into construction, transport, communications, the financial sector and extractive industries. One of the sectors that holds opportunity for investment is retail – from supermarkets to fashion to SME retail.
Although Mozambique’s economic outlook remains robust, there are concerns that delays in construction of liquefied natural gas (LNG) plants and coal mining projects, as well as continued weak commodity prices could dampen growth. Other challenges facing the country include a shortage of skilled human resources and a shortage of (primarily) roads and electricity.