Dear Subscriber,

Politics will shape Africa in 2024

2024 is the year of elections in Africa. 19 countries have their elections, indicating a pivotal shift in Africa’s political climate, especially as coups and attempted coups pervaded the continent in 2023.

Still, African countries could be resilient in difficult times

2023 provides a rather troubling template for how African elections have been playing out. The resentment of the working class against the rulers as a result of the cost-of-living crisis is leading to insurgency and military coups. This is sending jitters down the spines of international investors who are unable to price in the political risk into their models. Sub-Saharan Africa’s debt is projected to climb by 1.8% to 17.2% in 2024 from 15.4% in 2021, with more countries muscling up the courage to overlook the “Africa risk premium” in the international capital markets to raise Eurobonds. Ivory Coast has taken the lead as the first African country to issue Eurobonds in the last two years. Investors’ reception of the country’s debt issuance could be the green light to other countries needing external funding amid a tight domestic fiscal climate, an unforgiving interest rate environment, and a default-ridden continent. Between 2022 and 2023, 3 countries, including Ghana and Ethiopia, defaulted on their repayments.

And bright spots exist, amplifying the continent’s growth prospects

Political conundrums aside, Africa’s growth prospects in 2024 and beyond are rather optimistic, with the global economy set to rebound on likely monetary easing from H2’2024. Though with caution, investors will keep eyeing African economies that are likely to remain hawkish with monetary policy, playing catch-up to the global economy to curtail exchange rate pressures. In 2023, top African economies like Nigeria, South Africa and Kenya witnessed an average decline in their currency value by 24% against the greenback. Still, Africa is expected to grow by 3.98% in 2024, up from estimated 3.30% in 2023, with countries in the East African Community like Rwanda (6.68%) and West Africa like Ivory Coast (6.6%) as the major growth drivers for the continent. Meanwhile, the largest economies by GDP, namely Nigeria and South Africa, are expected to underperform the continent’s growth at around 3.06% and 1.8%, respectively. Notwithstanding, Africa’s economic resilience is worth watching as the year unfolds.

In this edition of the FDC Afriscope, we analyze burning macroeconomic and political issues plaguing Africa.

Enjoy your read!