Most economies in sub-Saharan Africa are expected to witness accelerated economic recovery next year.But they will also grapple with a number of challenges that will try to hamper the expected growth. These challenges range from political tensions to exchange rate crisis and of course, the COVID-19 pandemic.
With just a few weeks left till the end of what has been an eventful 2021, a lot of people are already wondering what 2022 would be like for sub-Saharan Africa. Well, first it’s going to be a new year! And then you should expect the usual economic and political tensions, more health scare thanks to COVID and then some good news. At least, that’s according to a recent forecast by London-based Economic Intelligence Unit.
According to the forecast, most economies in sub-Saharan Africa are expected to witness accelerated economic recovery next year, even though they will also grapple with a number of factors that will try to slow the expected growth.
In specific terms, the COVID-19 pandemic is expected to be a major hinderance to increased trade and investments in the region. According to the forecast by the Economic Intelligence Unit, “business continuity, investment and revenue-generation prospects could be impaired by successive waves of infection and the ebb and flow of containment measures, including prolonged international travel restrictions.”
Note that the threat posed by the pandemic is especially real given the appallingly low vaccination rate in SSA. Also, a new variant of the virus called the Omicron was recently discovered in the region, a situation that had resulted in travel bans being placed on most SSA countries by the US and the EU. These travel bans will contribute towards slowing down economic recovery.
Another economic trend that should be expected in 2022 across SSA markets is the unfortunate pressure caused by exchange rates and external debt repayments. The Economic Intelligence Unit expects that the FX and debt pressure will most likely elicit calls for debt restructuring, as against debt service referrals.
Also, political tension and conflicts will continue to be a major issue for sub-Saharan African countries in 2022. As you may well know, there are lots of conflict hotspots on the continent already, including Ethiopia which is gradually destabilising by the day. Besides these political conflicts, the forecast by the Economic Intelligence Unit sees the activities of jihadists and militias continuing to be a serious challenge to the region.
On a positive note, however, a commodities boom is expected in 2022 for SSA. Also, the digital transformation of the economies in the region is expected to continue. Lastly, the forecast said that there is a likelihood travels and tourism will bounce back next year. However, we say the newly discovered Omicron variant could make that impossible.