How the African economies tipped to thrive in 2017 actually performed
The first few business days of the year allow for a sober assessment of what worked in the previous year, and what didn’t. The African economies that investors were keeping an eye on in 2017 were ones that were eager to harness renewable energy sources and strengthen their manufacturing sectors.
Quartz took a look at how the African economies tipped to thrive in 2017 actually fared. We also looked at whether Nigeria, South Africa and Angola had a year that was as bad as expected.
Côte d’Ivoire could not maintain its lead as the fastest growing economy after it was outpaced by Ethiopia’s boom. Throughout 2017, the country’s annual growth estimates hovered around 8%, but investor confidence was shaken by the threat of mutinying soldiers.
President Alassane Ouattara was able to quell the threat as late as December only, by offering to pay off soldiers as part of a voluntary retirement scheme. That retirement scheme may not hold, though. In January last year, soldiers were paid to end a brief upraising, and in May the state was again forced to negotiate with soldiers who took over parts of the second largest city Bouake.
Instead of keeping soldiers happy, Côte d’Ivoire’s focus should have been on enacting its National Development Plan, which was supposed to help the country complete large infrastructure projects and diversify its economy.
A large part of the plan was the ambition to go from the world’s largest raw cocoa exporter to actually manufacturing and marketing its own chocolate. While some progress has been made, cocoa prices have fallen and farmers fear an unseasonably hot December and January could hurt their crops, showing that Côte d’Ivoire has not yet weaned itself from being a raw materials exporter.
Senegal wrapped up the year with the inauguration of its new airport that authorities hope will serve 3 million passengers, a hallmark of the country’s consistently positive growth records in the past few years.
In 2016, it was termed by the World Bank as the second fastest growing economy in Africa, further validated with this past year’s economic growth. In its third quarter in 2017, Senegal’s economy grew at rate of 7.1%, its strongest since the last quarter of 2015, when it was at an all-time high. Analysts such as African Economic Outlook expect overall growth to be as high as 6.8% in 2017, and have predicted a growth of 7% for 2018.
The Plan for an Emerging Senegal (pdf) seems to be on track and president Macky Sall has the goodwill to forge ahead, not only in his country but as a leader in francophone West Africa.
This year, Benin’s economy continued to show promise with its “Revealing Benin” plan which was unveiled in December 2016. In April, by the International Monetary Fund (IMF) awarded about $150.03 million to Benin in support of the program.
Costing an estimated total of $16 billion, the “Revealing Benin” project aims to be completed by 2021. It includes plans to invest in agriculture and infrastructure and focus on strengthening its tourism industry.
In September, the country’s growth for 2017 was estimated to be 5.4% – from 4% the previous year. In December, IMF managing director Christine Lagarde said they are forecasting a growth of 6% for 2018.
Despite this optimism though, Benin is heavily reliant on its much larger and more economically turbulent neighbor Nigeria, with 20% of its GDP earned from transit trade and export to Nigeria. One way to reduce this reliance, and boost the mainly informal economy, would be to focus even more on its tourism industry.
Like Benin, Togo entered 2017 with a clear plan to boost its economy. It was perhaps even more ambitious than its neighbor, with plans to become the Singapore of West Africa. At the center of these plans is the Port of Lome, a natural deep water port that could serve West and central Africa.
Then in the fourth quarter, Togo proved that investors may not mind a strongman, but they are spooked by popular protest. Demonstrations against president Faure Gnassingbé have led to deadly clashes and internet blackouts, yet opposition parties have been persistent in organizing rallies. Protestors are calling for an end to Gnassingbé’s fifteen-year rule, and an effective end to the family’s half-century grip on power. It’s unclear what will happen to Gnassingbé in the new year. The uncertainty means that Togo is no longer the safe bet it was just a few months ago
Following the 2016 drought that severely affected the economy, a rebound in agricultural output boosted growth in 2017, with agricultural production representing almost 15% of the GDP. One of Africa’s most popular tourism destinations, Morocco also enjoys a sizable income from tourism.
The country is also a popular destination for foreign direct investment and an increasing number of Fortune 500 companies who see it as a gateway to Africa and the Middle East. All of this has seen increasing government revenues and keeping inflation low. A fiscal consolidation plan from the government was also expected to reduce public debt levels.
Despite the good news, Morocco’s economy is not out of the woods. The export of phosphates and extractives continued to drive the economy, with non-agricultural activities growing at 3.3% according to the World Bank. Trade deficits reached almost 20% of GDP, youth unemployment remained at over 29%, and poverty still remained a major concern in the North African nation.
Following a full year of negative growth in 2016, Nigeria started 2017 with a flailing economy. A drop in the price of oil, Nigeria’s main export, as well militant sabotage of key oil installations was largely blamed for the country’s slumping economy but, almost as crucially, a dollar crunch hit local businesses and the country’s middle class hard. The first quarter of 2017 set the tone for the rest of the year, The economy exited its first recession in more than two decades and began bouncing back thanks to (surprise!) a boost in oil production and revenues.
Maintaining that growth in 2018 will, again, depend on oil production and prices as the World Bank projects meager growth of 1% in 2018. But there’s still some work to do: Crucially for Nigeria, with presidential elections due in early 2019, economic policy and decisions in 2018 will likely be weighed against political expediency over much else.
For Angola, 2017 represented a seismic shift as Jose Eduardo dos Santos, president for 38 years, quit office. João Lourenço, the former defense minister, won the presidential election in August. Lourenço is now tasked with reviving one of Africa’s major oil economies.
Like Nigeria, Angola, Africa’s second largest oil producer, has been hit hard by the fall in oil prices. Indeed the drop in revenues has even necessitated budget cuts to essential services, like waste collection. Lourenço has already made a major move by firing Isabel dos Santos, his predecessor’s daughter, as head of Sonangol, the state oil firm. The move is seen as the first of many to remove the dos Santos’ family’s hold on power as he looks to rebuild Angola’s economy.
Another step the new president might be looking to take is a devaluation of Angola’s currency, the Kwanza, as part of a mooted deal with the IMF. The devaluation is expected to boost the private sector.
South Africa had a tough 2017 with citizens’ and investors’ fears coming to life. All the indicators pointed to a downward spiral for Africa’s most advanced economy. Much of the country’s financial and economic uncertainty is due to the political environment.
Earlier this year, president Jacob Zuma fired finance minister Pravin Gordhan, setting off a soverign ratings downgrade and a weakening currency. The inability to put policy enactment ahead of political infighting saw record unemployment, a technical recession and deep pessimism among the people. The election of businessman Cyril Rampaohosa as new president of African National Congress at the end of the year saw the rand rally, but uncertainty remains.
With a projected 0.7% growth rate and continued infighting within the African National Congress, the IMF saw few prospects for improvement.
“Despite South Africa’s institutional strength and favorable global conditions, increasing domestic political uncertainty and stalled reforms point to a challenging economic outlook,” the IMF’s Ana Lucía Coronel said at the end of a visit in November 2017.