10 Fastest Growing Economies in Sub-Saharan Africa

Sub-Saharan Africa has faced and continues to experience some of the worst economic effects arising from a number of both internal and external developments.

The continent was named the poorest inhabited continent in the world in March 2013. However, according to the World Bank’s predictions, if current development rates continue, most African nations will achieve “middle income” status by 2025 (which is defined as having at least US$1,025 per person per year). 

The Challenge of The African Continent

The African continent has a poor economy for various reasons, including the fact that historically most people lived in tribal, rural societies despite the continent having several empires trading with other parts of the world.

In addition, European colonization and the subsequent Cold War created political, economic, and social instability. While many factors have contributed to Africa’s current state, understanding these issues can help to develop solutions for a better future.

A 2019 World Bank research study found that poverty in Africa decreased from 54% in 1990 to just over 41% in 2015, which equals around 400 million people. And if the continent’s economy continues to grow at its current rate, the poverty rate is expected to drop to 23% by 2030. However, this would still mean that Africa would make up a rising proportion of global poverty compared to other countries’ rates of poverty eradication.

Huge Potentials For Growth

Africa has enormous growth potential. A 2016 estimate from McKinsey & Company found that Africa, the world’s youngest and fastest-urbanizing continent, will see 24 million more people moving to cities yearly between 2015 and 2045 – more than India and China combined. This growth presents a huge opportunity for businesses to tap into. With the right strategy, businesses can reap the rewards of Africa’s urbanization boom.

These findings suggest a significant uptick in consumption rates across Africa. In fact, between enterprises and consumers, the continent has already spent $4 trillion. And by 2025, it’s estimated that household consumption will increase by 3.8% annually, reaching a total of $2.1 trillion. Additionally, business expenditures are expected to grow from $2.6 trillion in 2015 to $3.5 trillion in 2025. As a result, the McKinsey analysis estimates that the total African economic market will reach $5.6 trillion by 2025.

Some of these potentials are in agriculture. For example, it is projected that Africa has about 60% of the world’s uncultivated arable land and has increased its agricultural productivity. With this, it could produce 2-3 times more cereals and grains and similar gains in horticultural crops and animals. The infrastructure sector offers further prospects. As of 2010, Africa still required annual spending increases of at least $46 billion to update its energy, water, and transportation systems.

Africa’s rich natural resources, which include 10% of the world’s oil reserves, 40% of its gold, and 80% of its platinum, present some worthwhile investment options. However, one shouldn’t overstate the significance of these resources for Africa’s future prosperity. A 2019 Goldman Sachs economic study report claims that since 2000, commodities have only contributed to about 30% of GDP growth in Africa.

Challenges Besetting the African continent

Africa is a continent with the potential to significantly improve the lives of its citizens and be a reliable economic partner for the rest of the globe. However, the continent is currently hindered by institutional laziness, corruption, and poverty, which could lead to instability and spread worldwide. 

One-fifth of the world’s population will soon reside in Africa. If the continent takes steps to develop wealth, it could significantly impact the global economy. According to research by the McKinsey Global Institute, Africa’s economic possibilities will total $5.6 trillion by 2025.

The region has nonetheless entered its first recession in more than 25 years due to COVID-19, with activity declining by about 5% per capita. Additionally, it has worsened many countries’ significant and ongoing public debt vulnerabilities. Moreover, reduced opportunities and unequal access to social safety nets hurt vulnerable groups disproportionately, including the poor, workers in the informal sector, women, and young people.

There’s no question that the Ukraine crisis has had disastrous consequences for Africa’s economy, including rising prices for gas, oil, and agricultural commodities. With the continent still recovering from the COVID-19 pandemic, any instability caused by Russia’s invasion of Ukraine could set Africa back even further. The African press reports that the continent will not escape the economic and political repercussions of Russia’s actions. As we become more interconnected, it’s important to remember that conflict can have ripple effects beyond the immediate fighting area. The crisis in Ukraine is a stark reminder of this fact, and Africa is feeling the repercussions even though it’s not directly involved in the conflict.

Despite all of this, the world’s and Africa’s economies are still negotiating the challenging terrain to grow stronger. Africa’s economy was expected to increase by 4.5 percent in 2021, but the war in Ukraine has brought about a new and unfortunate event, causing growth to decrease to 3.8 percent in 2022.

Economic Outlook For Africa
The World Economic Outlook Database for 2022, published recently by the International Monetary Fund (IMF), contains projections for the global gross domestic product (GDP) growth for various nations. Here is a ranking of how African economies are predicted to perform over the next two years based on projected growth in 2022.

1. Niger

The primary and tertiary sectors performed well, with real GDP growth predicted to reach 6.9% in 2022 from an average of 5.6% for the 2016–18 period. Investments in infrastructure, extractives, services, and structural reforms—particularly initiatives targeted at fostering the private sector and boosting agricultural resilience—are responsible for this rise. With a projected rate of 3.8% in 2022, inflationary pressures remained under control.

2. Rwanda

The 1994 genocide severely harmed Rwanda’s economy. The ethnic cleansing significantly reduced GDP and undermined the nation’s capacity to draw domestic and foreign investment. Since then, the economy has grown stronger; the nominal GDP per person is predicted to reach $909.9 in 2022.

According to IMF projections, Rwanda’s Real GDP will increase at a 6.4% annual rate in 2022, nearly twice as fast as the average for the area.

3. Democratic Republic of Congo

The Democratic Republic of the Congo (DRC) is the largest nation in Sub-Saharan Africa. The DRC is blessed with outstanding natural resources, a sizable amount of arable land, incredible biodiversity, and the second-largest rainforest in the world. Yet, unfortunately, one of the poorest countries in Africa is the DRC. In 2022, the nation’s projected real GDP growth (% Change) is predicted to be 6.4%.

4. South Sudan

This landlocked nation, officially known as the Republic of South Sudan, is predicted to have the fourth-fastest economic growth in Africa. In 2022, real GDP growth was anticipated to be 6.5%. The peace agreement concluded in September 2018, and the reopening and restart of several oil fields, especially those in the Upper Nile state, were the primary factors in this year’s ranking. However, the economy continues to be primarily driven by the oil industry, the service sector and agriculture.

5. Mauritius

The nation is the second richest in Africa and has a good ranking for economic competitiveness. The economy is still performing well. In 2018 and 2019, real GDP growth was 7.4%, and it is anticipated that in 2022 it will fall to 6.0%.

6. Equatorial Guinea

Cocoa, coffee, and lumber were the traditional foundations of Equatorial Guinea’s economy, but in the 1980s, the discovery and exploitation of petroleum and natural gas drastically altered the country’s economic structure. As a result, more than half of Equatorial Guinea’s gross domestic product and exports are now made up of petroleum (GDP).

Equatorial Guinea’s real GDP is expected to rise by 6.1% in 2022, according to the IMF, due to the impressive results of the primary and tertiary sectors.

7. Côte d’Ivoire

Since gaining independence, the Ivory Coast’s economy has expanded faster than most African nations. Taxes on agricultural exports may be one factor in this. The country is the fourth-biggest export of general commodities in sub-Saharan Africa and the world’s largest exporter of cocoa beans.

The economy is still performing well. However, it has been predicted that real GDP growth, which was 6.5% in 2021, will decline to 6.0% in 2022.

8. Benin

Benin’s economy relies on local trade, cotton production, and subsistence farming. Around 30% of the GDP and more than 50% of official export receipts are attributable to cotton. Benin’s continued solid economic expansion is anticipated to reach 5.8%.

9. Kenya

Kenya’s economy has experienced significant growth, evidenced by its robust performance in tourism, higher education, telecommunications, energy, industry, and manufacturing.

The demand-side factors of household spending, investment, and services will cause the real GDP to rise at a 5.7% rate in 2022.

10. Gambia

The Gambia has a market-based, liberal economy distinguished by traditional subsistence farming. About 70% of the labour force is employed in agriculture, contributing about 30% to the GDP.

Following the political change in 2016, GDP growth surged to 5.7% in 2018, spurred by a rebound in commerce, tourism, agriculture, and related industries. 5.6% has been predicted for 2022.