EAST African region will continue to lead other regions in Africa in terms of economic growth thanks to infrastructure investment and the expansion of financial and telecoms services, an Institute of Chartered in England and Wales (ICAEW)’s latest report says.
The report which paints a rosy picture of growth in the region says East Africa is expected to remain the strongest growing region with a 6.3 per cent economic expansion this year.
Ethiopia, Rwanda, Tanzania and Uganda are all expected to record real GDP growth above 6 per cent this year, largely due to infrastructure investment and the expansion of financial and telecoms services.
African economic growth has in general been driven by public infrastructure investment and the expansion of services to a largely underserviced population.
However, financial technology (FinTech) is increasingly receiving attention from both private and public sector, facilitating innovation in other sectors of the economy and allowing African nations to leapfrog more traditional infrastructure.
Michael Armstrong, Regional Director, ICAEW Middle East, Africa and South Asia said “African economic growth is currently driven mostly by traditional sectors, However, FinTech has the opportunity to leapfrog other key drivers and to foster inclusive development. But this can only happen if it is managed properly.”
Almost one-third of total funding on the continent was raised by fintech start-ups in 2017. This can be supported by the fact that 60 per cent of all mobile money accounts globally can be found in sub-Saharan Africa (SSA), according to an Ecobank study.
The FinTech sector is set to show strong growth over the medium term, from roughly $200m in 2018 to $3bn by 2020. The majority of these investments have been routed towards Kenya, Nigeria and South Africa. It is expected that success in FinTech in these countries will expand to other African countries.
The Franc Zone is expected to record a commendable 4.9 per cent expansion this year. Senegal saw a relatively free and fair election in February setting the stage for positive increase in economic performance of 6.5 per cent. Ivory Coast’s economic growth is forecast to reach 7.0 per cent this year, boosted by a rebound in agricultural exports and a strong industrial sector.
In Central and West Africa, there are signs of a more broadbased economic recovery in Nigeria, which is set to grow by 2.5 per cent this year. Rising oil output should continue to boost GDP in Ghana which will grow by 6.4 per cent this year.
The DRC’s economy will benefit from strong momentum in the mining sector, but non-mining activity will remain constrained by a weak currency and high inflation. GDP growth is nonetheless forecast to rise to 4.4 per cent in 2019. In Southern Africa the economy is expected to contract by 1.5 per cent this year as it lurches from very bad to worse.
This situation if further compounded by Zimbabwe’s political instability which still remains a concern. Onlookers were hoping for Angola’s to grow by 1.1 per cent this year owing to reform efforts, which have continued to build confidence.
South Africa’s economy whose growth is currently at 1.3 per cent saw a sombre budget reading in February. South Africa and Malawi are both projected to grow by 4.2 per cent, Botswana by 4.4 per cent, Namibia by 2.1 per cent and Mozambique by 3.4 per cent, all of which are gearing up for elections.
Policy making and implementation will take a backseat to promises, but significant instability is not expected. In North Africa, the past quarter has raised the spectre of widespread instability.
Sudan is expected to grow by 1.2 per cent despite the popular uprising which has led to the resignation of longtime President Omar Al-Bashir.
Egypt, which is set to grow by 5.4 per cent, is grappling with the idea of President Abdel Fattah Al- Sisi seeking to change the constitution to stay in power past 2022.