Like the rest of the world, the African continent also went through pandemic economic turbulence during the last two years. When the pandemic hit in 2020, Africa entered one of the deepest recessions in half a century, with GDP contracting by 2.1%. In 2021, the continent gradually started emerging from the recession. . Last year, driven by a partial revival of tourism, commodity prices and the rollback of pandemic-induced restrictions, sub-Saharan Africa recorded a growth of 3.7%. North Africa also fared reasonably well, though the growth of the region is clubbed along with Middle East countries. According to the IMF and the World Bank, the recovery is likely to accelerate in 2022.The World Bank has forecasted for Sub-Saharan Africa’s economy to accelerate slightly to 3.6% in 2022 and rise further to 3.8% in 2023. The MENA region is set to reach a real GDP growth at 5.2% in 2022 and 4.6% in 2023.
Of course, there are growth assumptions like continued COVID-19 vaccination rollout across the region to counter potential upcoming waves of infections. Only around 8% of Africa’s 1.4bn population are fully vaccinated. Successive waves of infections and containment measures including travel bans can adversely impact the economic prospects especially for countries that rely on revenue from tourism. Travel and tourism could bounce back in 2022 to African destinations where vaccination rates are highest, although the recovery depends on the revival in key markets in Europe and Asia. Recurrence of the pandemic will also put pressure on the African health care sector which is already burdened by diseases like HIV, Ebola, and Malaria etc. Scientists are of the view that the high presence of co-morbidities like HIV creates the perfect environment for new variants to grow, threatening the revival of the region. Economic analysts are of the view that the commodities boom will extend well into 2022 and boost the performance of African commodity producers and traders pushing up corporate revenue and share prices among African energy, metals, materials and food producers. But such projections can haywire as were the cases in the past.
The IMF has pointed out that the pandemic has widened the gap between the non-resource-intensive countries with diversified economic structure and the resource-rich countries. According to the Fund, the top five economies to grow in Africa will be Seychelles, Rwanda, Mauritius, Niger and Benin which may hit above 6% growth. Ghana, Côte d’Ivoire and Senegal are also projected to reach near pre-pandemic levels. .These countries claim to have diversified economies with proactive governments working to attract investment and build a business friendly environment. In North Africa, Egypt can register a smart recovery since the country remained vigilant in attracting more investments during the pandemic. Also, the focus given by the European Union to make North Africa economically active can earn a brownie point for the region, though the real motive of the EU is to check the excessive migration.
FDI in Africa fell by 16% in 2020 to $40bn, from $47bn in 2019 and improved slightly in 2021– impacting the commodity-dependent countries than non-resource- based countries. Due to the external risks like rising inflation and a slowdown in the global economy, the investment outlook for Africa in 2022 remains muted. Potential sectors for investments include tech and digital infrastructure – two sectors which thrived during the pandemic. According to latest data, investment in African tech has risen from $2.4bn in 2020 to $4.9bn in 2021. Fintech emerged as the undisputed leader n 2021 with several companies with valuations above the $1bn mark. This trend is expected to continue in 2022 with tech companies from other sectors including agriculture, health and education reaching the unicorn status. The East African region with its more diversified economies outperformed much of the rest of Africa during the pandemic .However,moving to 2022, experts say that the region may begin to lag as its two biggest economies – Kenya and Ethiopia – experience recession and governance issues. The sluggish growth of large economies like Nigeria, Angola and South Africa with GDP growth at 2.7%, 2.4% and 2.2% respectively may pull down the continent’s overall average. Another threat to growth as per IMF is the climate change. The Continent is likely to record incidence of extreme weather patterns ranging from wildfires to cyclones destroying crops, businesses and livelihoods across the continent. Political Observers say that Conflict hotspots will continue to rumble on in 2022. Ending the civil war in Ethiopia, repelling the Islamist terrorism in Sahel, Sudan, Algeria, Somalia and Mozambique will remain as major challenges for the African governments. For many countries in the continent, 2021 was turbulent with political upheavals and economic slump.Let us hope that 2022 will be more economically and politically stable and peaceful for the continent
