East Africa, celebrated as Africa’s growth hotspot in the past decade, is facing challenges, and now West Africa is rising as the continent’s fastest-growing region despite debt concerns in Ghana and political instability in Nigeria.

According to a report by the Pretoria-based NKC African Economics an arm of global consultancy Oxford Economics; “We should not be too surprised to see major debt default with Kenya, Ethiopia and Ghana drawing unwanted attention. Nigerian politics could be pushed over the edge,” said Jacques Nel, NKC’s Head of Africa Macro.

NKC projects nine per cent real GDP growth for Rwanda in 2021, Ethiopia (7.9 per cent), Cote d’Ivoire (6.5 per cent), Burkina Faso (6.4 per cent), Uganda (6 perccent), Senegal (5.7 percent), Kenya (5.6 per cent), Gabon (5.1 per cent), Cameroon (4.3 percent) and Tanzania (4.2 percent).

While the pandemic has adversely affected both East and West Africa regions, NKC argues that the downside risks to economic growth are greater in the East due to political considerations too.

That recovery prospects look greater in the West as several East African countries are dealing with exogenous shocks and some self-induced difficulties like public debt among others.

The political fragility in Ethiopia following the Tigray uprising is of concern. Ms Nel says while Ethiopia’s federal government has claimed victory, the scars of the war will threaten Prime Minister Abiy Ahmed’s project of unification.

Struggling governments

“Uganda’s Yoweri Museveni secured a sixth term in office, but resurgence in protests and subsequent heavy-handed government reactions cannot be dismissed while Tanzania’s lax approach to containing Covid-19 could result in substantial political backlash,” she said.

The weak fiscal position of Kenya in 2019, the pandemic, hesitance to partake in any debt relief due to possible credit rating implications and conclusion of President Uhuru Kenyatta’s legacy mean spending restraint is unlikely.

Ms Nel said Kenya’s on-off collaboration with International Monetary Fund has produced repeated commitments towards fiscal consolidation but the efforts have consistently disappointed.

Multilateral and bilateral debt relief and favourable funding conditions at the global level mean struggling governments could avoid defaulting on debt if they play their cards right. Kenya’s public debt has nearly doubled as a proportion of GDP over the past decade.

NKC projects public debt servicing will equate to about 2.3 per cent of GDP in Ethiopia, 2.6 per cent of GDP in Kenya and three per cent in Ghana.

Locusts have compounded effects of Covid-19, social unrest and supply chain disruptions. Impact of food security is detrimental to’ livelihoods but also risks sparking resource-based conflicts.

Cote d’Ivoire will be one of the strongest economic performers in Africa this year due to sound pre-Covid-19 macroeconomic policies, a decisive policy response to the pandemic and a relatively robust cocoa sector.

Gabon is also set for recovery in 2021 as energy prices recover and public-private partnership in infrastructure sector could stimulate economic activity after enduring Covid-19- induced havoc and slump in global oil prices.

Senegal has remained resilient amid the pandemic and the recovery is expected to see the GDP expand by nearly 7 per cent driven by strong momentum in agriculture and construction sectors.