Africa’s largest economies are in trouble – small neighbors are doing better.
At first glance it seems that in 2022 good news is finally promising for sub-Saharan Africa. Unlike in most of the rest of the world, the region is forecast to accelerate growth. In part, this reflects last year’s toughness.
While the rest of the world was already recovering from the coronavirus pandemic thanks to vaccines, less than five percent of Africans had received both vaccines by October.
As growth elsewhere naturally slows, Africa can afford to tighten.
Still, the International Monetary Fund forecasts only 0.1 percent growth growth by 2022, or 3.8 percent growth.
Deviation is huge.
Even before the pandemic, South Africa, Nigeria and Angola, which together account for about half of sub-Saharan Africa’s GDP, were in trouble. The slow pace will continue in 2022.
Relatively small economies like Rwanda and Seychelles are on their feet and well above the region’s growth forecast. The same is true of medium-sized economic areas such as Côte d’Ivoire and Ghana.
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The return of easy oil money will reduce the pressure on politicians to take economic diversification seriously.
What Has the big economies of sub-Saharan Africa gone wrong? In Nigeria, older people think almost everyone.
The country is the largest economy in the region, but it is suffering from a deep security crisis.
Boko Haram and other jihadist groups terrorize the northeastern part of the country. In the northwest, bandits kidnap people and blackmail farmers by preventing them from entering the fields.
The government has shut down schools and shops and even communications networks in the north-west of the country in an attempt to bring the rebels out of hiding.
In the southeast, separatists are constantly demanding that people stay at home in protest against the federal government.
This is detrimental to all livelihoods.
Nigerian the economy is also heavily dependent on oil. Gross domestic product per capita may fall again in 2022, as every year after 2015, when crude oil prices plummet. The problems are exacerbated by the poor condition of the roads, power outages and volatile decision-making.
The rise in oil prices could save Nigeria in 2022 if the country’s poor oil wells are pumped enough. But the return of easy oil money will reduce the pressure on politicians to take economic diversification seriously.
Also Angola is highly dependent on oil. President in power in 2017 João Lourenço wants to diversify the country’s economy. Rising oil prices could help recover from the recession. However, the country is having difficulty getting so much oil pumped that it would help.
Angola is indebted, especially to China, and the population is outraged, as the elite celebrated in the early years of the oil boom and little was left to the rest of the population.
Oil cannot be blamed for South Africa’s problems. Instead, insider capitalism, power outages, and low investment drove the country into another recession within two years before the pandemic. Unemployment then rose to over 30 percent due to the pandemic. The anger caused by political corruption and the plight of the economy led to unrest in July.
South Africa relies on the mining industry, so the hope for an economic recovery in 2022 is based in part on high extractive prices. It still takes a long time to fix the problems.
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Problems still lie from political conflicts to rising debt levels.
Good luck there is news.
The IMF forecasts seven percent growth for Rwanda and 6.5 percent growth for Benin in 2022. When tourists return to Seychelles, it could reach eight percent.
Ghana, Côte d’Ivoire and Senegal should all be close to the pre-pandemic growth rate.
None of these economies are dependent on the oil or mining industries. Recently, there has also been investment in infrastructure such as roads and broadband, a commitment to further diversification and a desire to liberalize the private sector.
Monia problems still lie ahead from political conflicts to rising debt levels. And the pandemic also affected these countries.
Without help, covering the funding gap, long-term health problems and education problems can prove to be a huge and daunting task.
In South Africa, the income level is upper middle caste and therefore the country often considers itself an exception on its continent. Yet its GDP last grew six percent more than 40 years ago.
Nigeria is happy to point out that the economy of one of its states, Lagos, alone is larger than that of Ghana as a whole.
However, the IMF forecasts 6.2 percent growth for Ghana this year, and only 2.7 percent for Nigeria.
So size doesn’t always matter.
In 2022 and beyond, the big ones should take lessons from their small neighbors.
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