Is the worst of Africa’s downturn really over?
The president of the AfDB predicted that Africa’a economies will grow by 3,7 % in 2017, but some find this forecast overoptimistic.
The African Development Bank (AfDB) believes that Africa is over the worst of the economic downturn. As a big lender to African projects, it is obviously in the Bank’s best interests to talk up the continent’s economic prospects.
Speaking to Bloomberg in late September of 2016 AfDB president Akinwumi Adesina said “We have a situation of economic headwinds but African economies are quite resilient. We have 19 countries growing at 3- 5 % and 21 countries growing over 5 %. Afica isn’t falling apart. The ‘Africa Rising Story’ isn’t over”.
The AfDB forecasts continental growth of 3,5 % this year, rising to 3,7 % in 2017 and 4,2 % in 2018. There is therefore unlikely to be a return to the 6,8 % growth of sub-Saharan Africa averaged between 2003 and 2008 but the Bank does expect GDP to outpace the population rise, giving figures that can best be described as “modes”.
Whatever the rate of continental growth, the overall figure is almost certain to be dragged down by the two biggest economies in sub-Saharan Africa, with South-Africa stagnant and Nigeria in its first recession for a quarter of a century.
The IMF certainly does not agree with these projections. In October it cut its growth forecast for sub-Saharan Africa for 2016 to 1,4 %, which would be the lowest rate this century. The IMF’s breakdown of growth rates is particularly interesting. It forecasts an average of 0,3 % this year for the resource rich countries, while those without such natural resources will grow by an average if 5,6 %.
Source: African Business, December 2016
Nigeria’s population will be over 440m by 2050
Historically, fast growing African tech companies needing an immediate capital injection would have to reach out to foreign investors for this funding.
The need for investment, whether foreign or domestic, is crucial to both established an startup technology companies in Africa.
As most companies are unprofitable for a couple of years, capital is required to disrupt the current status.
The changing demographics in most African countries are helping consumer focused technology companies to reach better sales figures. A perfect storm of increasing smartphones penetration, improving disposable income and the rise of a highly connected younger generation is boosting this sector
There are almost 1bn Africans on the continent; millions are coming online each week, almost via the mobile, which is what’s driving demand. Soon, there will be more than 400m smartphones on the continent. The mobile is the most powerful communications and technology tool on the continent.
It is no surprise that many successful tech startups are based in Nigeria, Based on current projections, Nigeria’s population is forecast to grow to over 440m by 2050 and see a rapidly increasing middle-class population, with commerce spending in the country on track to total $8bn by 2025-
One thing is for sure – this is only the beginning of Africa’s tech boom.
Source: African Business, May 2015