It looks like 2018 is set to be a great year for sub-Saharan Africa. According to the World Bank, this region is home to no less than 6 of the world’s fastest growing economies in 2018:
- Ghana (8.3%)
- Ethiopia (8.2%)
- Ivory Coast (7.2%)
- Djibouti (7%)
- Senegal (6.9%)
- Tanzania (6.8%)
Ghana’s economy is the seventh biggest in sub-Saharan Africa and its expected growth in 2018 is predicted to be as a result of increased oil and gas production.
What’s interesting, though, is that Ghana’s economy could be even bigger than it seems.
Ghana plans to published overhauled economic data that will show its gross domestic product is bigger than currently estimated. As reported on Fin24, economic output will be remeasured using 2013 prices instead of 2006 and the basket of activities used to value the economy is being expanded due to new industries that have formed since 2006.
This is an ongoing process at the moment, so final numbers aren’t available yet.
In 2000, Ethiopia was the third-poorest country in the world. In 2018, it’s the second fastest growing economy in sub-Saharan Africa and the world.
It’s a trend that’s set to continue, as predictions are pointing to an annual GDP per capita increase of 6.2% through 2022.
It’s no mean feat but clearly this east African country has what it takes. Ethiopia has in the last decade consistently registered double-digit GDP growth stimulated by state-led investments in infrastructure and manufacturing.
The Ivory Coast is the world’s biggest cocoa producer and its economy’s fundamentals are solid.
However, life is not without challenges for the Ivory Coast.
Due to unrest in 2017, progress made on the country’s National Development Plan has been slow. The Plan is supposed to help the country complete large infrastructure projects and diversify its economy. Ivory Coast wants to do more than produce cocoa – it also has ambitions of manufacturing and marketing its own chocolate.
Djibouti’s expected growth is estimated to be driven by direct investment as well as the transport, telecommunications, retail services and building sectors.
Plans already set in motion is the expansion of port facilities to handle more commodities, containers and other goods. Djibouti is also building two new airports to handle not only more tourists, but also more cargo.
Senegal has improved services that support production, particularly energy and transportation.
The mining sector also grew stronger. Two of Senegal’s most prominent mines, Grande Côte Opération and Sabodala Gold Opération, had increased zircon and gold production respectively.
Another factor contributing to Senegal’s economic growth is the fact that the country has taken advantage of lower oil prices in recent years. New power plants came online, reducing power outages and driving down the cost of energy production.
In 2017, Tanzania’s economic growth was driven largely by the mining and quarrying, manufacturing and construction sectors. As is evident by its position as the 6th fastest growing African economy in 2018, Tanzania’s upward trend is set to continue.
Sectors considered ones to watch are agriculture and infrastructure, the latter of which is said to support investment.
The region as a whole
The World Bank describes sub-Saharan Africa’s 2018 as follows in their Global Economic Prospects report:
Growth in the region is anticipated to pick up to 3.2 percent in 2018 from 2.4 percent in 2017. Stronger growth will depend on a firming of commodity prices and implementation of reforms. A drop in commodity prices, steeper-than-anticipated global interest rate increases, and inadequate efforts to ameliorate debt dynamics could set back economic growth. South Africa is forecast to tick up to 1.1 percent growth in 2018 from 0.8 percent in 2017. Nigeria is anticipated to accelerate to 2.5 percent expansion this year from 1 percent in the year just ended.
While Africa certainly has its challenges, it also presents many opportunities. Especially the six fastest growing economies. This might be the year to invest in Africa if you’re not doing so already.