Which African Economy is Thriving? A Comprehensive Analysis

The African continent is comprised of a diverse range of economies, each with its own unique strengths and challenges. When considering the best-performing economies on the continent, several countries stand out. This article delves into the economic state of key African nations, providing a detailed analysis to help answer the question: which African economy is currently making the most strides?

Introduction

When evaluating the economies of African nations, several aspects need to be considered, including governance, poverty, education, growth rates, and equality. These factors contribute to a comprehensive understanding of a country's economic health and potential for sustainable development. This article will explore three of the top-performing African economies and highlight what makes them stand out.

Nigeria: A Case of Stagnation

Once one of the fastest-growing economies in Africa, Nigeria has seen its growth rates slow down significantly. Between 2000 and 2014, Nigeria experienced an impressive year-on-year GDP growth rate of 7%, driven largely by its oil and production sectors. However, since then, Nigeria has faced numerous challenges, including oil price shocks, political instability, and high youth unemployment. The country's population, with over 202 million people, remains one of the largest on the continent. Despite these challenges, Nigeria still holds the distinction of being Africa's leading producer in terms of GDP output.

With the ongoing crude oil price war and the impact of the coronavirus pandemic, it is likely that Nigeria will not meet its target growth rate of 2% for 2020. The political and economic environment remains uncertain, and these external factors are expected to continue to affect the country's economic trajectory.

Tanzania: A Bright Spot in Economic Growth

When it comes to emerging economies in Africa, Tanzania is often highlighted as a standout performer. Recent research indicates that Tanzania is likely to maintain its current level of economic growth, with a projected mid-single-digit growth rate for 2020. This would make it one of the few economies in the world to achieve steady growth during these challenging times.

The key drivers behind Tanzania's economic performance include:

Growing government revenue: Total income tax collection has increased by 20-30% from the previous month over the past six months. Strong loan growth: Both of the country's major banks are on track for double-digit loan growth in 2020. Robust cement production: The country's largest cement company has seen a 8% increase in cement sales year-over-year in 1H2020, with the CEO predicting even stronger growth in the second half of the year. Resilient tourism industry: While local tourism has been affected by international travel restrictions, Tanzania has managed to maintain a competitive position. Strong agricultural sector: East African Breweries, a Kenyan business operating in Tanzania, reported a 14% increase in beer sales in the first half of 2020 compared to the same period in 2019.

Ethiopia: Breakthrough Infrastructure Projects

Another thriving economy in Africa is Ethiopia. Despite facing economic challenges, the country has been making significant progress in infrastructure development. One notable achievement is the completion of its massive hydroelectric dam project on the Nile, which has significantly improved the country's power supply and energy security. This project not only provides essential energy infrastructure but also supports industrial and agricultural growth, contributing to the overall economic development of Ethiopia.

Other indicators pointing to Ethiopia's economic strength include:

Consistent GDP growth: While not as high as in previous years, Ethiopia's GDP growth remains positive, indicating ongoing economic stability. Investment in agriculture: The government has been investing in modernizing agricultural practices, which is expected to boost productivity and employment in the sector. Investment in telecommunications: Ethiopia has been making significant strides in expanding its telecommunications network, which can drive further economic growth and foster digital inclusion.

Conclusion

In conclusion, while several African economies are facing challenges, there are clear standout performers. Tanzania, with its growing tax revenue, loan growth, and burgeoning industries, is likely to maintain its economic growth trajectory. Ethiopia, with its ambitious infrastructure projects and consistent GDP growth, is also showing strong economic performance.

For investors and policymakers looking to support African economies, these countries offer promising opportunities. With careful planning and the right policies, these economies have the potential to continue their upward trajectory and contribute significantly to the continent's overall economic prosperity.