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Morocco, Kenya, and Ghana are Africa’s fastest-growing economies as the continent’s giants, Nigeria and South Africa struggle to contain worsening economic conditions, according to reports by GlobalData.
Africa is expected to record a healthy growth rate of 3.8% in 2021 driven by rising global demand as restrictions are eased, untapped market opportunities, a rebound in commodity prices and a rise in oil prices, states the UK based data and analytics company.
But GlobalData also cautions that policy somersaults and depleting foreign income could hurt the optimisms. FDI inflows declined by 20% in the African region in 2020 due to subdued commodity prices and pessimistic investor sentiment amid the COVID-19 pandemic.
Continent’s heavies: Nigeria, South Africa trail behind
Like most countries on the continent, South Africa is witnessing its worst recession. It is Africa’s largest economy after Egypt. The pandemic not only halted mining and manufacturing activities but also hit the tourism industry terribly even as bloody protests in some major cities further put the country on the edge.
Africa’s largest economy by GDP, Nigeria, occupies the 7th position in terms of recovery and growth. Nigeria’s slow growth rate is within a 2.3% forecast as it contends with shrinking FDI, falling currency value as Naira loses against major world currencies; rising food inflation, rising debt service payments, stalled reforms and heightened insecurity.
Nigeria leads the rest of the continent with a nominal GDP of USD 466.88 followed by Egypt with USD 374.89 and South Africa with USD 317.19. Morocco’s nominal GDP USD is 112.220 while that of Kenya is USD 101.048 and Ghana USD 73.594.
Morocco leads the continent in growth
“Morocco has been moving ahead in leaps and bounds in recent years, has provided the world with produce following promising agricultural seasons.
“The country’s expected growth of 5.19% was also influenced by its effective vaccination drive, accommodative monetary policies and fiscal stimuli.”
Rao continues: “Strong banking fundamentals and a rise in external demand for commodities is expected to help recovery in South Africa, which is predicted to see 4.09% growth.
“However, this has been hampered by recent protests in the country. Private consumption growth is to remain the major driver of economic growth in Egypt.” Economic Research Analyst at GlobalData, Gargi Rao, says.
Nigeria pitching recovery on ICT
“To achieve a faster economic recovery in H2 2021, Africa’s policymakers need to accelerate structural transformation through digitalization, industrialization and diversification,” the Economic Research Analyst adds.
Rao’s observation is already slowly gaining grounds in Nigeria. Faced with the challenge of dwindling oil revenue, Nigeria is desperately seeking to wriggle out of near absolute dependency on crude oil export.
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According to the Nigeria Bureau of Statistics (NBS), in terms of contribution to Gross Domestic Product (GDP), the oil sector accounted for 9.25 per cent of aggregate real GDP in Q1 2021, while the non-oil sector accounted for 90.75 per cent of aggregate GDP in the first quarter of 2021.
The country’s GDP grew by 0.51 per cent (year-on-year) in real terms in the first quarter of 2021, marking two consecutive quarters of growth in sharp contrast to negative growth rates recorded in Q2 and Q3 of 2020.
The ICT sector is now the industry with the highest growth rate in relation to the GDP and clearly outperforming the oil sector. The NBS reported a second quarter of 2020 (Q2 2020) 17.83% contribution of the ICT sector to the country’s GDP. The ICT sector is expected to further record pulsating growth even in the face of positive recovery in the global oil industry.
Nigeria is committing more efforts at building its digital economy as it seeks a future outside of crude oil. According to Minister of Communications and Digital Economy, Dr. Isa Ali Ibrahim Pantami, the digital economy will contribute more than 45% to Nigeria’s GDP while noting the increasing impact of policy investments including the National Broadband Plan 2020-2025 which focuses on broadband penetration, and as at July 2020 has achieved a broadband penetration level of 42.0%. This is expected to reach at least 50% by the end of the 2021.
“We are making use of the covid-19 era to achieve digital economy development”, said Pantami.
