Can Africa fulfil its growth potential?

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Author:  John Hawksworth, Chief Economist, PwC UK

After decades of relative economic under performance, sub-Saharan Africa1  has been one of the fast growing global regions over the past decade, as indicated in Figure 1 below. Only the emerging and developing economies in Asia, led by China and India, grew faster over the period between 2003 and 2013.

Fig 1 - Past and projected GDP growth for major country groups

Furthermore, the latest IMF projections from October suggested that sub-Saharan Africa should continue its relatively strong performance, growing by just under 6% per annum over the rest of this decade. This would be only just below its historical average rate and not far behind expected growth in emerging and developing Asia.

Strong projected growth in Africa reflects many of the factors highlighted in our megatrends research, including a relatively young, fast-growing workforce, rapid urbanisation, adoption of mobile communications technology and a rich endowment of natural resources in many African countries.

At the same time, however, we should recognise that:

  • Africa is a large and diverse continent, so performance could vary considerably across (and indeed within) countries; and
  • these growth projections are not guaranteed to be achieved, being subject to many risk factors including commodity price volatility, rising Islamic militancy in some countries, Ebola and other health risks, and a longer term need to improve both physical infrastructure and political, legal and economic institutions to support sustainable growth.

The first point can be illustrated by looking at past and projected growth (according to the IMF) for the ten largest economies in sub-Saharan Africa, which together account for around 80% of the region’s total GDP (see Figure 2).


Fig 2 - Past and projected GDP growth for 10 largest Sub-Saharan African economies

The divergence in past and projected growth between the region’s two largest economies, Nigeria and South Africa (which together account for around half of the region’s total GDP), is particularly stark. Nigeria is, based on recently revised GDP data, now ranked as the 20th largest economy in the world. And, with the IMF projecting relatively healthy growth of around 7% per annum over the rest of this decade, Nigeria could move even further up the global league table. By contrast, projected average growth of 2.4% for South Africa in 2014-19 is no better than the expected average for the world’s advanced economies as shown in Figure 1, implying no further catch-up by Africa’s second largest economy.

For the other major economies in the region, projected growth varies from just over 5% in Cameroon, Ghana and Angola to around 8% in Ethiopia. But, as Figure 2 shows, actual growth over the past decade has varied by much more than this and, in practice, this variability is likely to re-emerge in future due to the differential risks facing sub-Saharan economies.

Most obviously, while the recent sharp fall in oil prices could pose a significant risk for Nigeria and Angola in particular, most other sub-Saharan African economies are actually net oil importers and so might gain from this oil price fall if it’s sustained. By contrast, economies like Kenya, Ghana and Cote D’Ivoire would be more heavily exposed to falls in coffee or cocoa prices.

The Ebola crisis understandably looms large as a risk factor at present, and is clearly a great human tragedy in the three West African countries where it’s mostly been focused  (Guinea, Liberia and Sierra Leone). However, outbreaks in Nigeria seem to have been brought under control, so the hope must be that the wider economic damage can be limited. It does, however, highlight the need to improve health systems across Africa, not least in its fast-growing megacities.

More generally, if Africa is to fulfil its potential, it needs long-term improvement in political, legal and economic institutions in order to provide the right environment for both domestic and international investment to proceed. Long-term investment in energy, transport and communications infrastructure is also critical, but won’t happen without the right institutional environment. There’s been encouraging progress in many African countries on these fronts in recent years, but there’s clearly still a long way to go to get infrastructure and institutions up to the levels seen in Europe, North America or the leading Asian economies.



John Hawksworth is an economist who specialises in macroeconomics and public policy issues. He is Chief Economist in PwC’s UK firm and editor of our Economic Outlook reports. He is also the author of many other reports and articles on macroeconomic and public policy topics and a regular media commentator on these issues. Read John's full biography.


1Throughout this article we focus on sub-Saharan Africa since the North African economies are, for a variety of historical and geographical reasons, more naturally considered alongside the Middle Eastern economies for analytical purposes.


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