Africa’s Fastest Growing Economies

africa fastest growing economiesFour of the world’s 10 fastest growing economies for 2015 and 2016 are forecasted to come from Africa. The countries to which these four economies belong could come as a surprise.

At number one is Ethiopia. The rest of the spots belong to the Democratic Republic of the Congo (DRC), Ivory Coast and Mozambique.

This according to a report released by rating firm Moody’s earlier this year.

Ethopia’s lofty ideals

The Ethiopian government wants to grow their country to a middle-income nation by 2025. Judged by past and current economic growth rates, this is a reachable goal.

Ethiopia’s economy grew from roughly 3% in early 1990 to an average of 10% in the last 10 years.

When asked how Ethiopia has managed to achieve this, Ali Abdi Ise, an expert on Ethiopia and Somalia, told the media:

“[It was achieved through] non-corrupt and able leadership with zero tolerance for corruption; stable government policies; sound economic plans based on successful economic growth models; and millions of hard-working and law-abiding workforce with favourable work ethics and can-do attitude inherited from Ethiopia’s past greatness…”

Should Ethiopia’s economy continue developing at current rates, the country’s gross domestic product is estimated to grow to $213 billion by 2030. This would indeed make Ethiopia a middle-income nation.

The DRC, Ivory Coast and Mozambique

Africa is a complicated continent. This is evident when we look at the economies of the DRC, Ivory Coast and Mozambique. These economies might be growing fast, but they are not necessarily large or well developed.

Many African countries and their economies suffer from high income inequality, low levels of per capita gross domestic product and elevated political instability.

The DRC has surely seen its fair share of political instability. Despite this, however, the country’s economy has been recovering at a steady rate over the past decade.

It is estimated that the compound annual growth rate (CAGR) of the DRC’s GDP from 2014 to 2017 will amount to 8.62%. The biggest contributor to this number would be the country’s natural resources.

The Ivory Coast, on the other hand, will depend on agriculture-related activities to achieve the projected 7.8% CAGR of their GDP. This also from 2014 to 2017.

Agriculture in the Ivory Coast is mainly in the coffee and palm oil industries. This West African country is the world’s largest producer and exporter of cocoa beans.

Number four on the list, Mozambique, is estimated to experience a CAGR of 7.30% on its GDP from 2014 until 2017. With large investment projects in its natural resources, Mozambique could arguably experience the most steady and sustained economic growth.

But do not overlook Kenya

Kenya has shown significant economic growth too. Earlier this year, Bloomberg predicted that Kenya will be one of the top emerging markets coming out of Africa and Asia in 2015.

Bloomberg’s forecast is mirrored in the World Bank’s estimate that Kenya’s economic growth will increase to 7% by 2017. The World Bank credits this growth to falling oil prices as well as public investment infrastructure, mainly in energy and standard gauge railways.

The continent as a whole

Africa is just doing fine, thank you. According to the Wall Street Journal, African economies will grow 4.5% on average in 2015. This increases to 5% in 2016.

So while there are definitely still stifling factors, such as the mentioned high levels of high income inequality and political instability, Africa is growing into a continent to be reckoned with.

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