12 Fastest Growing Economies in Africa

Published on November 20, 2022 at 4:22 pm by Swati Goyal in Economy, Lists, News

In this article, we will take a look at 12 fastest growing economies in Africa. If you want to see more of the fastest growing economies in Africa, go directly to the 5 Fastest Growing Economies in Africa.

Africa’s economy started recovering in 2021 following the disastrous consequences of the COVID-19 pandemic. Its gross domestic output increased significantly in 2021 by an estimated 6.9%. The anticipated real GDP growth for Africa in 2021 was higher than both the global average and other regions’ growth rates. Four of Africa’s top six countries had an increase in their Purchasing Managers’ Index (PMI) readings, indicating an improvement in economic activity. Egypt, Kenya, Nigeria, and South Africa’s PMI values in 2021 (which collectively accounted for 52% of Africa’s GDP in 2021) were usually over the 50-point threshold and closer to pre-pandemic levels. This comes after the continent saw a 1.6% shrinkage brought on by the pandemic in 2020. North Africa (11.7%) and East Africa (4.8%) had the fastest growth. The increase was ascribed to the recovery in oil prices and global demand as well as the uptick in household spending and investment in the majority of nations following the easing of restrictions.

Overall, macroeconomic fundamentals have improved, but there are still many challenges to face in the near future. The global macroeconomic headwinds and instability caused by the war between Russia and Ukraine may cause growth to slow to 4.1% in 2022 and stagnate there in 2023. The PMI rating for four of Africa’s six major economies decreased in March 2022 due the start of the Russia-Ukraine war in February 2022.

IMF African Department Director Abebe Aemro Selassie thinks that the effects of the Ukraine war — primarily an increase in gasoline and food prices — would be felt by everyone. According to the World Bank, the combined consequences of the Ukraine war, massive debts, and climate change have hampered Africa’s economic progress.

African countries have tremendous economic potential with rewarding opportunities for investors. Therefore, despite so many obstacles, a number of African countries have been able to expand their economies, which was primarily made possible by advances in underlying infrastructure that accelerated the convergence of underdeveloped regions with national levels. Other countries have profited from rising oil prices. For all of the countries on our 12 Fastest Growing Economies in Africa list, each is growing faster than 5% in terms of GDP growth as of 2021.

Major global mining companies like Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan, Inc. (NYSE:FCX) are also investing heavily in Africa. Technology startups are also sprouting all over the continent, with huge investments from companies like Google, Apple and Amazon.

Photo by Jacques Nel on Unsplash

Methodology

We used the data from the World Bank’s annual GDP growth 2021 list to compile our ranking of the 12 fastest-growing economies in Africa.

Fastest Growing Economies in Africa

12. Ethiopia

GDP growth in 2021 according to World Bank: 5.64%

Ethiopia is the second-most populous nation in Africa after Nigeria, with an anticipated 117 million residents in 2021. With 6.1% growth in FY2020/21, it also saw the strongest economic growth on the continent. Ethiopia’s economy, however, slowed to 5.6% growth in 2021 due to the civil war and COVID-19’s repercussions on the travel and hotel industries. From 20.4% in 2020 to 26.7% in 2021, inflation rose far beyond the central bank’s 8% objective. GDP growth is predicted to dip to 4.8% in 2022 before rebounding to 5.7% in 2023, with industry, private consumption, and investment driving development.

11. Republic of the Congo

GDP growth in 2021 according to World Bank: 5.71%

Democratic Republic of the Congo (DRC) growth had a remarkable comeback, rising from 1.7% in 2020 to a projected 5.7% in 2021, far higher than the 4.5% average in sub-Saharan Africa. The strength of the nation’s mining and services sectors was a key factor in the robust rebound. In a setting characterized by the continuance of the COVID-19 epidemic and the worldwide repercussions of the Russia-Ukraine war, the prognosis is encouraging but remains precarious. The accelerated vaccination campaign, increased oil production, and dynamics in the agricultural and mining sectors are projected to stifle GDP growth to 4.3% in 2022 and 3.2% in 2023, respectively.

However, the mining sector in the country remain strong and major players like Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan, Inc. (NYSE:FCX) are bringing millions in investments.

10. Zimbabwe

GDP growth in 2021 according to World Bank: 5.85%

Zimbabwe’s economic growth accelerated to an anticipated 5.9% in 2021 from a 6.2% fall in 2020 due to a bountiful harvest that expanded agriculture by 36.2% in 2021 as opposed to 4.2% growth in 2020. The per capita GDP also increased, jumping by 4.9% in 2021 after declining by 6.7% in 2020. However, in 2022, economic growth was held down by unstable prices and deteriorating agricultural circumstances. The real GDP growth rate is anticipated to decrease from 5.8% in 2021 to 3.4% in 2022.

9. Senegal

GDP growth in 2021 according to World Bank: 6.06%

Senegal stands ninth on the list of 12 of the fastest growing economies in Africa. With 6.1% growth in 2021 compared to 1.3% in 2020, the economy started to recover, in part because of the Adjusted and Accelerated Priority Action Plan. The return of the extractive industry, building and commercial activities related to high demand, as well as transportation services, were the main drivers of this growth. The recovery is predicted to slow down in 2022 to 4.6% owing to the consequences of the Russia-Ukraine war. However, it is estimated to rebound in 2023 to 8.2% thanks to governmental and private investments as well as increased oil and gas extraction. Oil and food prices will rise, causing inflation to reach 3.2% in 2022 before dropping to 2.2% in 2023.

8. Benin

GDP growth in 2021 according to World Bank: 6.60%

The cornerstones of Benin’s economy continue to be agriculture and transit trade with Nigeria, both official and unofficial. The GDP growth rate for Benin increased to 6.6% in 2021 from 3.8% in 2020. The major forces behind this expansion were the service and construction industries. Inflationary pressures have increased significantly since the end of 2021, when annual inflation was only 1.7% on average. Since the beginning of the crisis in Ukraine, inflation has intensified and is being driven by increasing food and petroleum product costs. In 2022 and 2023, growth is expected to be 6.1% and 6.4%, respectively. These predictions rely on changes in the corporate environment, governmental financial management, and agriculture sector governance.

7. Burkina Faso

GDP growth in 2021 according to World Bank: 6.90%

In 2021, Burkina Faso’s economy saw a remarkable recovery, expanding by an estimated 6.9%. The recovery in the service sector (+10.4%) and the continued rise in gold exports were the main drivers of this expansion. The primary sector contracted by 4.1% as a result of the drop in agricultural production brought on by the lack of rain. In 2021, the gold industry helped exports grow by 6.5%, while imports increased by 15.5%, primarily as a result of increases in the price of hydrocarbons and electricity. In 2022, the predicted rate of growth is 4.3%. This slowdown in GDP can be attributed to a number of factors, including the decline in private investment, the rise of insecurity in some mining and agricultural areas, and the Russia-Ukraine war and its effects on prices for food, fertilizer, and petroleum products.

6. Morocco

GDP growth in 2021 according to World Bank: 7.37%

Morocco is a North African country known for its agriculture, phosphate minerals, and tourism. Following Morocco’s first recession in 20 years, export performance, the low-base effect, and an outstanding 2020–21 agricultural season all contributed to GDP growth of 7.37% in 2021. However, a sudden downturn in economic activity brought on by a variety of concurrent reasons led to GDP growth falling to just 0.3% in the first quarter of 2022. Another drought, the third in the preceding four years, and its repercussions, were to blame for this. Furthermore, because it imports food and energy, Morocco has suffered greatly from the increases in commodity prices brought on by the crisis in Ukraine.

As the African economy comes back to normal, major mining companies like Newmont Corporation (NYSE:NEM), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan, Inc. (NYSE:FCX) are beginning to operate in the continent with huge resources.

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