There are rapidly growing megacities in Africa, including Accra, Cairo, Lagos, Johannesburg, Nairobi and Kinshasa, and it is important to ensure infrastructure development grows at a pace that will meet increasing consumer demand from these megacities, Imara Africa Consulting managing partner and macroeconomist Barbara Barungi has said.
She delivered the keynote address at the fourth yearly Royal Institution of Chartered Surveyors summit, which took place in late May.
Barungi shed light on how the economic growth prospects would affect the macroenvironment and Africa’s development.
Global gross domestic product (GDP) grew by 3.7% in 2017 – with Africa being the second-fastest-growing continent.
“The 3.7% GDP growth in Africa is cause for celebration, especially given that 2015 and 2016 saw the big economies – Nigeria and South Africa, as well as Egypt – slowing down,” Barungi said.
However, she noted that, to consider the context of this African growth, it was important to look at the various regions, rather than looking at Africa as a continent.
East Africa is expected to lead GDP growth in 2018 at 5.9%, with Rwanda, Tanzania, Kenya and Ethiopia being the fastest-growing economies in the region.
The predicted GDP growth for North Africa is 4.6%, with Egypt and Morocco the leading economies.
West Africa has been hit by Nigeria’s recession, owing to the downturn in commodities affecting GDP, and is, therefore, likely to grow at a slower pace than the rest of Africa at 3.4%, where growth will be aided by Senegal and Côte d’Ivoire.
Southern Africa has a lower predicted GDP growth rate at 2.5%, which is influenced particularly by the slow growth rate in South Africa.
Central Africa has a predicted GDP growth of 1.3% in 2018.
“Large economies are growing at a much slower pace than the smaller economies. East Africa is a region of small countries, compared with Southern Africa, which has South Africa and Angola as big economies, and Nigeria in West Africa,” averred Barungi.
She added that, although it was good to see some of these regions growing at a faster rate, the question was how sustainable this growth would be and what drove growth in these regions.
“The top fastest-growing countries, including Ethiopia, Côte d’Ivoire, Rwanda, Senegal and Ghana, are small economies, but what are the implications for the rest of the region? We need a spillover effect across the continent to ensure that we can sustain the growth over a longer period.”
Ethiopia has managed to sustain growth at 7% for at least the past five years.
“To what extent are policymakers looking at economic diversification away from commodities? We keep talking about increasing diversification of these economies to establish sectors around construction, agriculture and value chain development, and yet our economies are influenced by commodity prices.
“The question then is: How best can we break away from this dependence?” Barungi asked, noting that Ethiopia was starting to show interesting developments in the manufacturing and construction sectors.