Nigeria’s economy is set to be outshined by African peers for the sixth year running in what holds big implications for the race to attract private investment.
The COVID-19 pandemic triggered severe economic contractions in sub-Saharan Africa, pushing the economy into its first recession in 25 years.
Economic activities in the region contracted by an estimated 3.7 percent last year after expanding by 3.2 percent in 2019, according to the World Bank.
The pandemic stifled household consumption and investment due to the lockdown coupled with sharp contractions in major sectors.
With over 3 million reported COVID cases across the continent, the pandemic is still not under control in Sub-Saharan Africa as persistent outbreaks in several countries continue to inhibit the recovery.
However, growth in Sub-Saharan Africa is expected to rebound by 2.7 percent in 2021 with economies predicted to drive this growth while others continue to be a drag on growth.
The growth rate was computed using an average of the growth forecast by the World Bank, IMF and Renaissance Capital.
Nigeria is projected to grow by the least of the major economies in sub-saharan Africa at 1.2 percent.
Kenya is tipped to grow the most at 5.2 percent, followed by Tanzania at 4.8 percent. Ghana is expected to expand by 3.3 percent while South Africa grows at 3.05 percent.
The countries tipped to grow faster than Nigeria, which has struggled with tepid growth rates since 2015, are better placed to attract foreign investment. Their governments are also able to generate higher taxes.
Source: World Bank, IMF and Renaissance Capital
Kenya
Kenya recently slid into its first recession in almost two decades as the country’s attempt to curtail the spread of the virus continued to hurt output.
The economy contracted 1.1 percent year on in the third quarter of 2020 after shrinking 5.5 percent in the second quarter.
The recession was caused by the shutdown of a major market coupled with travel restriction depleted the country’s source of foreign exchange which is inclusive of tourism and exports of tea, flowers, vegetables and fruits, the Kenyan NBS revealed.
Despite the slump, Kenya is expected to rebound by an average of 5.2 percent in 2021, as most institutions have predicted.
The World Bank sees Kenya’s economy rebounding by 6.9 percent in 2021 while the IMF has projected the economy to expand by 4.7 percent this year.
“We expect growth to quicken to 4.2 percent in 2021, on the back of a pick-up in services activity and recovery in manufacturing,” Analysts at Renaissance Capital have also predicted.
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Tanzania
Despite the Covid-19, Tanzania has continued to demonstrate a strong performance and has been predicted to grow even stronger in 2021.
While most economies were reeling from the pandemic, Tanzania grew by 5.7 percent in the first quarter of 2020, 4.0 percent in the second quarter and 4.5 percent in the third quarter, according to the Tanzanian National Bureau of Statistics (NBS).
This growth was largely driven by construction, agriculture, transport and mining, and quarrying.
“Tanzania is one of the SSA economies that we expected to have been least affected by the COVID19 pandemic because of its sizable agriculture sector, relatively stronger fiscal position, and relatively low exposure to global trade,” Renaissance Capital said in a report.
Renaissance Capital predicted that the economy would grow 5.0 percent in 2021.
The World bank predicts a slightly higher growth of 5.5 percent while IMF projects that the Tanzanian economy would grow 3.6 percent in 2021.
South Africa
South Africa is one of the few countries whose recession could not be blamed on the pandemic as the economy was already reeling from its longest recession in 28 years when the virus hit.
The pandemic made recession more severe as the lockdown restriction made the economy slump by 51.7 percent in the second quarter of the year.
South Africa is also one of the countries most hit by the pandemic, with over 1 million cases and more than 44,ooo deaths.
However, the country has managed to exit the consecutive four quarters of contraction as it expanded 66.1 percent in the third quarter of 2020.
Experts have predicted that the country would not attain its pre-Covid levels until 2025 although some institutions have predicted that its economy would grow modestly in 2021.
The World Bank has projected that the South African economy would expand by 3.3 percent in 2021 while the IMF predicts a growth of 2.8 percent this year.
Experts say a proper vaccine rollout is the potential game-changer. The government’s aim is to vaccinate more than 40 million people this year.
Nigeria
Nigeria has been predicted by most institutions to expand by 1.2 percent on the average in 2021.
Pushed by the pandemic, Nigeria entered its second recession in five years as real GDP contracted 6.1 percent and 3.62 percent in the second and third quarter of 2020 respectively.
The World Bank sees a growth of 1.1 percent in the economy in 2021 while the IMF has also revised its growth forecast for Nigeria down by 0.2 percent to 1.5 percent this year.
This is similar to the forecast of analysts at Renaissance Capital .
“We only see growth of 1.0 percent in 2021, as we expect services to continue to be a drag on growth, and little investment. This implies limited upside for government revenue, and a budget deficit that is likely to move sideways to 4.0 percent of GDP,” Renaissance Capital said in a report.
Angola
Angola, the continent’s second largest oil producer after Nigeria recorded its fifth year of recession in 2020 as the economy slumped 4 percent.
Exacerbated by the Covid-19 pandemic, Angola’s inflation rate jumped 21 percent, unemployment rose 34 percent and public debt increased to 123 percent of GDP.
Most institutions expect Angola to exit recession in 2021 as the World Bank predicts the economy will grow 0.9 percent.
However, the IMF has also estimated a GDP growth of 3.2 percent this year.
Although, it says the upturn is reliant on a stronger oil sector, especially an end to OPEC+’s production cuts, and a resumption of upstream investments to halt the structural decline in oil output.
Ghana
The Ghanaian economy contracted by 3.1 percent in the second quarter of 2020 and 1.1 percent in the third quarter of 2020, sending the economy into recession for the first time in 40 years.
The World Bank sees a modest recovery of 1.4 percent in 2020.
“This is because the expected resilience in the agriculture sector which will drive the growth will not be sufficient to offset the pandemic’s lingering adverse impact on oil and other sectors,” the Bank says.
However, the IMF expects Ghana to grow by 4.2 percent in 2021.
Similarly, Renaissance Capital also expects Ghanaian economy to grow by 4.3 percent in 2021 on the back of a recovery in the services and extractives sectors.
