African economic outlook: Forecasts for Ghana, Zambia, Nigeria and more

Lusaka, Zambia

Lusaka, Zambia

By Conrad Onyango, bird story agency

Economic analysts project Africa’s growth will soften but remain robust in 2022 as some countries look to benefit from the Russia-Ukraine war while others continue to be weighed down by the impact of raging drought, debt repayments and regional tensions.

Global economists see Africa’s economy in 2022 as presenting a mixed bag, with, on one hand, debt and drought shocks that will slow growth and on the other hand, the dual effects of a Russia-Ukraine war will that could create a boom or bust for some countries.

Metal exporting countries are tipped to gain from higher budget receipts as the Russian-Ukraine conflict unlocks their investment potential.

Conversely, import-reliant nations will experience fiscal constraints on the back of a higher cost of food and fuel prices triggered by the war in Europe, as well as civil conflicts and ravaging droughts, especially in the horn of Africa.

Across the board, weaker investment and debts have been highlighted as key risks to Africa’s economic growth in 2022.

“Regional growth will soften but remain robust this year,” according to Focus Economics, an analysis and forecast company that draws together economists from 300 countries around the world.

On March 24, The United Nations Conference on Trade and Development (UNCTAD) reviewed downwards its outlook on Africa’s economy by 1.1% to 1.8% in 2022, citing supply chain disruptions and monetary belt-tightening due to the Russia-Ukraine conflict.

UNCTAD’s updated Trade and Development Report 2021 shares similar sentiments that African economies will be affected in mixed ways, asserting growth expectations will be lower than earlier estimated.

“The considerable weight of oil and gas exports of the region will stimulate growth through higher volume and prices, but commodities represent a mixed bag,” said UNCTAD.

Analysts at Focus Economics see a rebounding oil sector, higher oil prices and a more than US$10 billion joint venture between oil companies BP and Eni, announced in March and aimed at boosting Angola’s LNG production, helping to lift that country from a five-year recession.

In Algeria, higher energy prices and investments in hydrocarbon production, analysts say, will likely boost government coffers to facilitate recently-introduced unemployment benefits. Together with a freeze on parts of a new finance law that would have pushed up food prices, these efforts are seen boosting spending power and economic growth.

Higher production prospects for natural gas in Mozambique – with a capacity of 3.4 million tonnes of LNG annually set to begin production in October – and higher capital and consumer spending will lead to robust economic growth for the country.

The Democratic Republic of Congo – which joined the East African Community bloc in March – is also projected to continue recording solid growth, buoyed by high copper prices and the expansion of the Kamoa-Kakula copper mine.

“However, political discontent and the spillover effects of the Ukraine conflict on energy and food prices cloud the outlook,” the economists said of DR Congo’s growth.

While Ghana’s economy is seen expanding on the back of the recommissioning of the Bibiani gold mine expected to increase mining output, analysts said a depreciating cedi would complicate debt payments owed in foreign currency – worsening the fiscal situation and posing a threat to the outlook.

Business-friendly policies and government’s fight against corruption, as well as high copper prices offer positive sentiment for Zambia’s economic growth. The investor-friendly environment, according to the economists gives “hopes of a debt-restructuring deal and access to external credit lines” to brighten the outlook further.

For South Africa and Tanzania, high prices for key agricultural imports following Russia’s invasion of Ukraine threaten their economic growth. However, the two countries are tipped to benefit from a boom in mineral exports.

Tanzania will reap big from gold – its’s key export and source of foreign exchange earner – while South Africa will gain through gold, maize and palladium exports.

Similarly, Tanzania’s economic growth “should accelerate this year, supported by large infrastructure projects that will buoy employment levels and help strengthen domestic demand’, according to the analysts.

It is only Nigeria among Africa’s big exporting countries that will not benefit from surging commodity prices, due to an inability to boost oil output. High inflation and security issues are also seen slowing down the economy.

“However, the government’s infrastructure push and the new oil bill should buoy fixed investment growth,” according to Focus Economic analysts.

Kenya’s growth will be “moderate” and “healthy” despite the country’s reliance on foreign capital for infrastructure and a rise in external debt.

A pick up in tourism on the back of the receding effects of the COVID-19 pandemic is projected to push up the growth of Egypt’s economy, which has been hit by energy prices volatility, higher unemployment rate and food security risks.

/bird story agency