1. How have the recent global headwinds affected leading sub-Saharan African (SSA) countries?
2. With high inflation and slow growth, is Nigeria losing its economic relevance in SSA?
From power outages in South Africa to rising debt in Kenya, Nigeria and Ghana, the top economies in SSA are seriously going through it.
While much blame comes from the rise in global interest rates stemming from the Russia-Ukraine crisis, we cannot overlook the role of endemic structural deficiencies that plague these countries. Some issues are the government’s lack of commitment to reforms, corruption, poor infrastructure, and continuous focus on low-value exports.
For these reasons, the IMF revised SSA’s growth forecast downwards to 3.6% in 2023 from 3.9% in 2022. The revision also aligns with the lower global growth forecast, which fell to 2.8% from 6% in 2021 due to high inflation and interest rate hikes.
Today, we will unpack how SSA’s top economies—Nigeria, South Africa, Kenya and Ghana—are faring amid these global challenges. We’ll examine their economic performance across GDP growth, inflation, interest rates and external debt. Afterwards, we’ll check if Nigeria’s economic relevance is waning amongst its regional peers.
We are zeroing in on its top countries because 1. they are emerging markets and developing economies that should record double-digit growth. As such, any deviation from this narrative is worth investigating. And 2. their currencies are pegged to the US dollar. By extension, they have to mirror the US Fed's monetary policy moves to protect local currencies, match up with interest rates to attract/retain investors and strengthen growth prospects.
Now that we know why these countries are of interest let’s see what the data says about their economic health.