For all of Covid-19’s disruptions, one trend during the global pandemic presses on unabated. And that would be five of the world’s 10 fastest-growing economies continue to be based in Africa and at least several more on the continent over the next two years are poised to outperform the world.
The coronavirus, if anything, accelerated the transition among Africa’s 54 countries to wireless, remotely engaged commerce from traditional exporters of natural resources in a region of the world where people are younger than anywhere else on average.
Three years ago, Uganda, Ivory Coast, Egypt, Ghana, Rwanda and Kenya were among the global top 10 fastest-growing economies as measured by their increasing GDP. The same countries, excluding Egypt, dominated again in 2021 and 2022, with Rwanda’s GDP expanding 11.1% and 8.2% when the world averaged 6.3% and 3.5%.
If the forecasts are to be believed, Rwanda will again lead the continent with an estimated growth rate of 6.8% this year, followed by Mozambique at 6.4%, Ivory Coast at 6.2%, and Ethiopia and Uganda at 5.5% — when the world economy is seen growing just 2.8%. As recently as 2018, only three African economies were among the top 10 across the globe when it came to the pace the expansion.
The sub-Saharan telecommunications industry is the juggernaut. For the 15 major companies in the region, sales are poised to surge 18% this year and 9% in 2024 and 2025 after advancing 29% over the past five years, according to analyst estimates compiled by Bloomberg.
Ghana-based Scancom leads the group with projected revenue growth of 34%, 23% and 21%, followed by South Africa’s Vodacom Group (26%, 6%, 5%) and MTN Nigeria Communications (23%, 18%, 16%). Such robust growth is unequalled in the world where telecoms revenue rose 20% during the past five years and is forecast to rise 1% on average this year and less than 3% in 2024 and 2025.
‘Structural high demand’
“During Covid, there was quite a demand shift as people moved online and moved to their homes, where we saw very strong growth, both in terms of data and fintech services,” Ralph Mupita, CEO of MTN Group, said during an earnings call with analysts in March. “We still see continued structural high demand for data and fintech services across our markets and that’s fuelling the growth that you see in non-financial numbers as well as the financial numbers.”
In sub-Saharan Africa, there are 96 wireless accounts for every 100 people, some of whom have more than one account. That’s 39 times the initial usage in 2000. South Africa and Ivory Coast have more than 160 accounts per 100 while Central Africa and Mozambique measure below 50, which means the business will continue its torrid pace of expansion.
The outlook for corporate Africa is similarly stellar with the financial, communications and consumer staples industries outperforming the world in 2024, based on analyst estimates. Telecom firms will see sales increase 11%, exceeding the global average of 3%. Financial firms will double the world’s 7% and consumer staples at 10% will crush the 6% projected for their global peers.
Companies in Ghana will lead sub-Saharan Africa with 34% revenue growth in 2023, followed by Nigeria’s 32% and 20% for Namibia. Scancom, the Accra-based wireless operator, delivered a 202% total return (income plus appreciation) since its initial public offering in 2018. Emerging market shares gained only 5% on average during the same period.
The assets of Zenith Bank increased 109 times since its 2004 IPO to US$27-billion. The shares rose 91% last year and analysts anticipate another 27% appreciation during the next 12 months. Capricorn Group, the Windhoek, Namibia-based investment company, increased its sales 51% during the past years and will see a 7% gain in 2024.
Even in the bond market, where most investors are suffering their worst losses of the new century (minus 5% for global government debt securities), Africa is proving to be a relative bonanza. Ghana’s sovereign bonds returned 20% (income plus appreciation) so far in 2023, followed by 11% from Mauritius and Zambia.
None of this investor confidence would be possible without the persistence of Africa’s exceptional growth.