AFRICA – In 2024, Sub-Saharan Africa’s economic recovery presents a complex, uneven landscape, with growth acceleration visible in approximately 60 percent of countries, while others lag behind their 2000–2019 performance levels, according to the October 2024 World Bank Group Africa’s Pulse report. This split recovery reflects differing growth drivers and challenges across the region, as seen in high-growth nations like Niger and Angola, and sluggish large economies like Nigeria and South Africa. Growth disparities highlight both the resilience of certain sectors and the pressures from inflation, currency instability, and slow structural reforms, which shape Sub-Saharan Africa’s evolving investment climate and policy landscape.
Growth Acceleration in Key Economies
In the 27 countries experiencing growth acceleration, the median growth rate increase of 0.5 percentage points underscores a positive trend, but notable outliers are pushing this figure even higher. Niger’s economy, for example, is expected to grow by 3.6 percentage points, propelled by stable agricultural output and the revitalization of its oil sector, including both new investments and improved production efficiencies. Angola, on the other hand, anticipates a 2.2 percentage point boost, largely due to the alleviation of oil production bottlenecks. The recent uptick in oil activity, following maintenance shutdowns, has been a critical factor, though Angola’s longer-term growth may be constrained without deeper diversification. In both countries, the gains in resource-based industries are highlighting potential vulnerabilities, as their reliance on commodities could expose them to future market volatility if structural reforms are not prioritized.
Large Economies: Nigeria and South Africa’s Slow Rebound
Conversely, many large economies in Sub-Saharan Africa, including Nigeria and South Africa, are grappling with slower recoveries, reflecting a mix of structural issues, fiscal constraints, and inflationary pressures. Nigeria’s projected growth rate of 3.3 percent in 2024 remains constrained by inflation, which, after peaking at 34.2 percent in mid-2024, saw only a marginal reduction. The persistent inflationary pressure is partly due to the naira’s devaluation and the gradual effects of subsidy removal, including a recent 40-45 percent increase in gasoline prices. While structural reforms—particularly in energy and fiscal policy—have been initiated, their impacts on growth and inflation are yet to be fully realized, leaving Nigeria’s economy vulnerable to further inflationary shocks. South Africa, similarly, expects modest growth, increasing from 0.7 percent in 2023 to 1.1 percent in 2024. Key infrastructure improvements, including better electricity provision and transportation reforms, should help improve South Africa’s outlook, but entrenched structural issues and slow reform implementation continue to hinder a more robust recovery.
Sector-Specific Recovery and Structural Drivers
The sectoral drivers of economic rebound are illuminating recovery pathways for Sub-Saharan African countries. Agriculture has been a particularly resilient sector, bolstering growth in countries like Kenya, Côte d’Ivoire, and Uganda. In Kenya, a combination of favorable weather patterns and strategic agricultural investments has revitalized the sector, while macroeconomic stability, evidenced by lower inflation and a stable shilling, has boosted private consumption. Uganda’s growth, expected at 6 percent in 2024, is similarly supported by agricultural output, with additional gains from infrastructure projects and improving regional trade dynamics. Côte d’Ivoire, achieving a 6.5 percent growth rate, exemplifies how infrastructure investments, particularly in digital and transportation sectors, can enhance productivity and investor confidence. The integration of digital infrastructure is not only expanding access to services but also creating new economic opportunities, thereby diversifying growth and reducing vulnerability to sector-specific shocks.
Currency stability remains another critical factor influencing Sub-Saharan Africa’s recovery, with varying impacts across countries. The West African Economic and Monetary Union (WAEMU) region, which benefits from a common currency tied to the euro, has seen consistent growth, aided by strong performance in member countries like Benin, Côte d’Ivoire, and Niger. In contrast, non-WAEMU nations like Nigeria, which contend with currency devaluations and inflationary pressures, face additional challenges in achieving stable growth. Kenya has also experienced currency pressures due to liquidity constraints and the need to fund fiscal deficits. However, prudent fiscal management and a more stable exchange rate are gradually strengthening Kenya’s position in the region, helping it avoid the severe inflationary pressures seen elsewhere.
Inflation Control and Currency Stability
Inflation control efforts vary widely, with some countries managing to keep inflation within target ranges, which in turn supports consumer confidence and domestic demand. In South Africa, headline inflation remains within the Reserve Bank’s target band, allowing for potential policy rate reductions that could stimulate household consumption and investment growth in the medium term. Angola’s inflationary pressures, although peaking in 2024, are anticipated to moderate as a result of tightened monetary policy and fiscal adjustments. Effective inflation management in these countries not only stabilizes domestic markets but also enhances their appeal to investors seeking predictable economic environments.
Investments in infrastructure and digital connectivity
Structural reforms and public investment have been pivotal in fostering resilience in certain economies while exposing vulnerabilities in others. In countries like Kenya, Rwanda, and Uganda, investments in infrastructure and digital connectivity are driving more sustainable growth patterns. These nations are leading the East African Community (EAC) with growth rates of 4.7 percent in 2024, projected to rise to 5.7 percent by 2025–26. Structural reforms in these regions, particularly in agriculture and infrastructure, are creating a more conducive environment for private sector growth and attracting foreign investment, which could serve as a model for other Sub-Saharan nations.
The investment landscape across Sub-Saharan Africa is thus shaped by a combination of resilience and vulnerability, with implications for policy priorities in the years ahead. Countries that manage to maintain macroeconomic stability, control inflation, and foster structural reforms—particularly in high-growth sectors like agriculture, infrastructure, and digital technology—are likely to draw greater investor interest and establish more sustainable growth pathways. However, for larger economies such as Nigeria and South Africa, overcoming structural constraints and achieving more consistent growth remains a challenge. As these countries work to stabilize inflation and implement necessary reforms, the pace of recovery will heavily depend on their ability to foster a more diversified and resilient economic base. In a region marked by wide heterogeneity, policy interventions that target sector-specific growth drivers while addressing inflation and currency instability will be essential to achieving a more balanced and inclusive recovery.
