Sub-Saharan Africa: Hit But Not Sinking
Sluggish global growth has been characterized in particular by China's loss of momentum and the shock to commodity prices. Sub-Saharan Africa has not been spared in this global tempest and seeks to maintain growth against wind and tide. Commodity producers are the most affected. The ability to adapt to these shocks is crucial for these countries, especially as financing conditions have deteriorated. Some have made rapid decisions and adjustments via a more restrictive policy mix, but others have found it more difficult to recognize the lack of sustainability of their economic policies. For example, Nigeria, after unsuccessfully trying to resist the downward pressures on its currency, decided on June 20 to adopt a more flexible exchange rate regime. But does Sub-Saharan Africa, this land of opportunity, still have wind in its sails? Are these cyclical shocks likely to continue to hinder these economies and jeopardize their growth potential?
These adverse winds will probably persist in the short term, despite the relative stabilization of commodity prices since the beginning of the year. Even though the trajectory of the "continent of the future" has been disrupted, and without denying the existence of weaknesses that include infrastructure, governance, and political stability, the Sub-Saharan Africa ship is far from sinking. Even the countries that have been weakened the most in the past few years have strong structural points. They could recover in the medium term, thereby providing attractive prospects for companies seeking for opportunities.
The private consumption potential in particular seems very encouraging in Nigeria, Angola, Ghana and South Africa. Accordingly, it offers companies real possibilities for expansion, particularly in the retailing sectors, even though the product diversification and the move up the value chain could be quite slow. The increase in the number of shopping centers, built by both African and foreign groups, is also an indication of investor confidence. Moreover, the information and communication technology (ICT) sector, in full expansion, opens promising horizons in these countries. Mobile phone penetration rates, which are on the rise but still low, point to a significant upside. The African ICT market is all the more attractive as many services are offered via mobiles (financial, trade, agricultural, etc.), thereby providing inhabitants in rural regions with access to a number of services they otherwise would not be able to have. In short, Sub-Saharan Africa has been hit, but is not sinking.
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