Invest Africa 2024 Regional Outlook Series - West Africa

In this podcast, we explore the evolving risk landscape in Africa and its impact on trade, investment, and gender. Genevieve Ahinful, Head of Political Risk and Trade Credit at Africa Specialty Risks, and Tokunboh Ishmael, Managing Director & Co-Founder, Alitheia Capital, discuss changing perceptions, offering insights into the opportunities and challenges for investors, and the need for companies to implement a gender-focused approach to their overall strategy.

In 2024, Africa grapples with a complex landscape, encompassing supply chain disruptions, geopolitical tensions from Russia's invasion of Ukraine, the persistent impact of COVID-19, rising inflation, and conflicts in the Middle East. Amidst these challenges, African nations are urged to leverage industrialisation opportunities, potentially catapulting the continent's GDP by 20%. Anticipating economic growth, countries like Angola and Mozambique are poised for a 6.2% expansion in 2024, surpassing the previous year's trajectory. Mozambique stands as the 16th fastest-growing economy, engaging in ongoing debt restructuring talks. While most African nations expect a relief from inflationary pressures, Angola and São Tomé and Principe may continue grappling with double-digit inflation, primarily driven by elevated oil prices. Lusophone countries, navigating the delicate balance between revenue generation from fossil fuels and the imperative to transition to clean energy, spotlight Mozambique's focus on Liquid Natural Gas (LNG) projects. Mozambique positions itself as a significant player in the global LNG market, seizing heightened demand amid the Russia-Ukraine conflict. As Africa's second-largest oil producer, Angola aspires to achieve 80% renewable power by 2025. Recent market reforms attract a diverse spectrum of investors, marking a departure from Chinese dominance to include Japanese, Middle Eastern, and European stakeholders. Even in island jurisdictions like Cape Verde and São Tomé and Principe, the imperative to transition to clean energy is evident. São Tomé sets an ambitious target of increasing the proportion of renewable energy to 50% by 2023, focusing on solar and hydro projects. Overcoming the current dependence on imported diesel for 90% of its energy, São Tomé and Principe envisions a sustainable energy future that yields inclusive growth. The investment landscape in Lusophone countries is encouraging, with international investors increasingly showing a willingness to support pivotal projects. This growing confidence within the investment community bodes well for the energy transition and overall economic development in these strategic markets.

In 2024, Africa is set to be the second-fastest growing major region, with most countries experiencing accelerated economic growth compared to 2023. East Africa, led by Ethiopia, Kenya, Tanzania, Uganda, and Rwanda, is poised to be at the forefront, contributing to Africa's real GDP increase from 2.6% in 2023 to 3.2%. However, political risks may rise due to elections in some major African economies. Following prominent multilateral events in 2023, including the inaugural Africa Climate Summit, Africa's vulnerability to climate change has gained greater attention. East Africa lags in meeting its $739.4 billion regional target for climate-resilient development by 2030, impacted by factors like drought and conflicts affecting growth in Kenya, Ethiopia, and Somalia. Although renewable energy investments have driven recent growth, more efforts are needed to meet the region's escalating energy access demands, and build climate-resilient infrastructure to support the region’s growing population. Intra-African trade stands at 13%, significantly lower than the EU’s 60%. As a key member of the East African Community, Tanzania, strategically located on the Indian Ocean, aims to enhance regional integration, boosting intra-African trade. The moderinisation of the Port of Dar es Salaam will play a crucial role in facilitating trade with landlocked countries in the region like Uganda and Rwanda, ensuring that they are “land-linked”. Despite numerous tailwinds, including sustained economic growth, economic diversification, increased regional integration, and favourable demographics, East Africa’s promising growth potential calls for continued investment in the region’s infrastructure. Addressing the current challenges of poor infrastructure, which adds between 30% to 40% to the costs of goods traded among African countries, will further enhance the region’s positive trajectory and capitalise on the favourable conditions to yield inclusive growth.

The economic dynamics and political landscape within the framework of Africa’s North markets for the 2024 fiscal year present a nuanced scenario.  The growth in North Africa is estimated to have decreased by 1.3 percentage points to 4.1 percent in 2022. This decline was attributed to the sharp contraction in Libya, accounting for 6 percent of the region’s GDP, and the impact of drought in Morocco, constituting 13 percent of the region’s GDP. A more robust growth trajectory is anticipated in 2023–24, averaging 4.5 percent. This resurgence is underpinned by a strong recovery in both Libya and Morocco, along with the consolidation of gains in other countries.   In contrast, Egypt’s growth almost doubled from 3.3% in 2021 to 6.1% in 2022 due to greater investments in infrastructure, higher gas production and increased vessel traffic through the Suez Canal.   Among the major North African markets, Morocco is poised to experience one of the most substantial rates of growth acceleration after a pronounced slowdown resulting from drought, escalating energy prices, and a deceleration of growth in the EU, its primary trading partner. Morocco's GDP is projected to expand by over 3.1% this year, a significant improvement from the 0.8% recorded in 2022. North Africa holds immense potential to meet its energy needs and act as an alternative source for the EU’s oil and gas requirements particularly in Libya and Algeria, given its proximity to Europe and the EU’s shift away from Russia’s oil and gas.   However, concerns persist regarding the quality of growth and its sustainability in the future. Sub-Saharan Africa has witnessed an upsurge in attempts to destabilise governments through unconstitutional or violent means in recent years. Coups, violent extremism, riots, and social unrest have become more prevalent. The region remains susceptible to significant challenges, including climate shocks and the volatile political situation in Libya.  While pockets of economic resilience exist, the region confronts notable challenges related to political stability and the long-term sustainability of economic growth. Addressing these challenges will be pivotal in fostering a more stable and prosperous future in North Africa’s markets. 

Southern Africa’s regional economic performance in 2023 compares unfavourably to that of other sub-regions, with growth slowing to 3.3% from 4% in 2022. The outlook for 2024 is uncertain due to the Southern Africa region remaining subject to significant downside risks. Over the 2023-2024 period, six Southern African countries (Botswana, Mauritius, Mozambique, Namibia, South Africa, and Zimbabwe) will hold presidential and/or parliamentary elections. These elections could exert upward pressure on wages and public spending, challenging fiscal discipline and the implementation of bold structural reforms.   Nevertheless, the continent has shown resilience despite significant shocks. Southern Africa’s overall outlook for 2024 remains cautiously optimistic, with growth expected to rebound to 4%. This growth is set to be broad-based, with top performers for the fiscal year likely to include Mozambique, Madagascar, Mauritius, and Zambia.   Despite grappling with high debt distress, exceeding 104% of GDP, Zambia’s GDP has consistently grown over the last two years. Zambia is poised to experience an improved macroeconomic environment, driven by a strengthened mining policy and a more reliable electricity supply. The Mauritian economy is projected to grow by 5% in 2023 and 4.2% in 2024, spearheaded by the tourism sector. Nevertheless, the ongoing Russia-Ukraine conflict, coupled with higher living costs in Europe, will lead to greater monetary tightening. Struggles with a power, logistics, and growth crisis have impacted South Africa’s public finances. South Africa’s medium-term outlook remains dim, but vital reforms are gaining traction.  

The economic dynamics and political landscape in the context of Africa’s Francophone markets for the 2024 fiscal year paint a complex picture. The Democratic Republic of Congo (DRC) remains the largest intra-African trading nation; its share of total African trade increased by 35.7% from $12.19 bn in 2021 to $16.53 bn in 2022. This is largely a result of government commitments to regional integration and strengthening cooperation across the continent. Cote d’Ivoire also stands out as a critical contributor to intra-African trade, with the country’s short and medium-term economic outlook remaining positive, albeit slightly below pre-COVID-19 levels. Among the major Francophone markets, Morocco is expected to enjoy one of the strongest rates of growth acceleration following a sharp slowdown caused by drought, rising energy prices and growth deceleration in the EU, its main trading partner. Morocco’s GDP is forecast to expand by more than 3.1% this year, up significantly from the 0.8% recorded in 2022. Still, the quality of growth and its sustainability in the future remains a matter of concern. Sub-Saharan Africa has witnessed an increased incidence of attempts to destabilize governments by unconstitutional or violent means in recent years. Coups, violent extremism, riots, and social unrest have become more commonplace. Ongoing conflicts, contested elections, and economic challenges have caused instability in countries like Chad and Burkina Faso. The upcoming presidential election scheduled for the DRC on December 20th 2023 will be a flashpoint for instability. While there are pockets of economic resilience, the region faces notable challenges related to political stability and the long-term sustainability of economic growth. Addressing these challenges will be crucial for fostering a more stable and prosperous future in Africa’s Francophone markets.

From supply chain disruptions stemming from Russia’s invasion of Ukraine to the lingering effects of COVID-19 to increased inflation and interest rates, and recent conflicts in the Middle East,  2024 is sure to bring a multitude of challenges and opportunities to Africa. However, against this backdrop of polycrisis, African countries have been urged to seize the opportunity presented with industrialisation which could see the continent’s GDP grow by 20%. While growth in West Africa slowed to 3.6% in 2022 from 4.4% in 2021, it is projected to pick up in the medium term, reaching 4.1% in 2023 and accelerating to 4.3% in 2024. Senegal stands out as an exemplary economy, with IMF projecting the West African republic to grow at a record rate of 10.6% in 2024, the highest rate since independence. Nigeria remains the most populous country on the continent, emphasising the continued need to diversify its economy and maximise renewable energy strategies. With regards to technology, Mobile Money services have made more inroads in Africa than in any other region, with West African countries, namely Senegal, Ghana and Cote d’Ivoire leading the way, indicating the need and desire to leapfrog traditional financial infrastructure.  Nevertheless, despite increased efforts to boost trade between countries on the continent, Africa trades far more with other countries than with itself. Increasing intra-Africa trade in 2024 will be critical to accelerate sustainable and inclusive economic growth across the sub-region and continent as a whole. Building partnerships that enable joint ventures and ensure local buy-in will be a priority for both the public and private sectors looking to further unlock Africa’s value-chain.

To celebrate International Women’s Day throughout the month of March, Invest Africa has been hosting a podcast series #WinningWomenInAfrica to promote inspirational African female industry leaders. #WinningWomeninAfrica will feature a weekly podcast, where our selected female industry leaders will reveal their path to establishing success, the challenges they encountered, and how women’s empowerment in Africa can be enhanced. Africa and the Middle East are the leading regions for the proportion of female CEOs, with Africa having the highest proportion of female board members globally at nearly 15%. Africa ranks second for the share of women-founded companies. Although global prosperity is more evenly distributed now than at any other point in history, there remains a staggering imbalance between men and women in the financial sector. According to the World Bank and International Finance Corporation, women-owned businesses face an estimated $1.7 trillion shortfall in access to finance. Dr Ngozi Erondu is a trained infectious disease epidemiologist with 15 years of experience working to improve health systems and global health governance. Her policy expertise includes strengthening regional leadership in pandemic preparedness and health security governance reform.

To celebrate International Women’s Day, Invest Africa hosts a podcast series throughout March #WinningWomeninAfrica to recognise inspirational African females. #WinningWomeninAfrica will feature a weekly podcast, where our selected female industry leaders will reveal their path to establishing success, the challenges they encountered, and how women’s empowerment in Africa can be enhanced. Africa and the Middle East are the leading regions for the proportion of female CEOs, with Africa having the highest proportion of female board members globally at nearly 15%. Africa ranks second for the share of women-founded companies. Although global prosperity is more evenly distributed now than at any other point in history, there remains a staggering imbalance between men and women in the financial sector. According to the World Bank and International Finance Corporation, women-owned businesses face an estimated $1.7 trillion shortfall in access to finance. Yemi is at the forefront of digital transformation to tackle business and social problems and is recognised as one of the leading Women in Technology in Nigeria and an inspiration for many

To celebrate International Women’s Day, Invest Africa is hosting a podcast series throughout March #WinningWomeninAfrica to recognise inspirational African females. #WinningWomeninAfrica will feature a weekly podcast, where our selected female industry leaders will reveal their path to establishing success, the challenges they encountered, and how women’s empowerment in Africa can be enhanced. Africa and the Middle East are the leading regions for the proportion of female CEOs, with Africa having the highest proportion of female board members globally at nearly 15%. Although global prosperity is more evenly distributed now than at any other point in history, there remains a staggering imbalance between men and women in the financial sector. Women-owned businesses face an estimated $1.7 trillion shortfall in access to finance according to the World Bank and International Finance Corporation Adesuwa Okunbo Rhodes founded Aruwa Capital Management in 2019 to bridge the investment gap for female-led businesses in Africa. Aruwa is one of the few women-owned and led private equity funds in Africa investing in untapped investment opportunities in Nigeria and Ghana. Aruwa has recently raised its first institutional fund in Nigeria, making Adesuwa the youngest general partner to raise US$ 20 million in Nigeria, with leading investments from the Visa foundation and Mastercard Foundation Africa Growth Fund.