While the IMF estimates a 3 percent drop in the region’s GDP in 2020, not all countries will be equally affected. Commodity exporting countries are among those most affected. A review of the 5 African economies that will lose the most this year.
Although relatively spared in terms of health by the coronavirus pandemic, sub-Saharan Africa will nevertheless experience a major economic and social crisis in 2020, as noted in the latest « Outlook » of the International Monetary Fund (IMF). The financial institution’s analysts thus estimate that the region’s economy will contract by 3% in 2020, according to their projections, « the worst outlook ever ». Some countries will nevertheless be more affected than others, the continent’s red lanterns being notably those that are most dependent on raw material exports and external flows of funds (tourism, remittances from the Diaspora, foreign direct investment …).
An unvarnished observation which reminds us, once again, that the main pitfall encountered by many African countries is the lack of economic diversification. Conversely, the report confirms that despite this difficult situation, several states with a more diversified economic base will manage to post positive growth this year, such as Southern Sudan (+4.1%), Benin (+2%), Rwanda (+2%), Ethiopia (+1.9%), Tanzania (+1.9%) and Côte d’Ivoire (+1.8%). However, the region as a whole is expected to recover as early as 2021, with overall growth of 3.1%.
Without further ado, here is the list of the 5 countries in Sub-Saharan Africa that are expected to experience the deepest recession in their economies in 2020, according to the IMF’s latest forecast.
The most competitive economy in sub-Saharan Africa according to the African Development Bank (ADB), Mauritius stumbled in 2020 for the same reasons that have made its success in previous decades: its strong exposure to global markets, particularly through tourism and financial services (74% of GDP), the two economic pillars of the country. With globalization coming to a (near) complete halt in the second quarter, followed by a slow recovery since then, it is the island’s economy as a whole that will be drinking the cup in 2020. This will make it even more difficult to redistribute the fruits of the Mauritian economic « miracle », already compromised before the crisis: according to the World Bank, the gap between the incomes of the poorest 10% of households and the richest 10% would have widened by 37% between 2001 and 2015.
Expected growth in 2020 : -14,2 %
Main sources of revenue: Tourism, Financial Services
A confetti of islands (about a hundred) with fine sandy beaches, the Seychelles archipelago today sees its dream of becoming a luxury tourism destination (360,000 visitors in 2018, four times more than the country’s total population) turn into a nightmare. In the aftermath of the coronavirus crisis – and its associated containment – the entire global tourism industry has collapsed. A terrible configuration for a small country that has bet everything on this very card (60% of GDP)… and already used to economic shocks: at the end of the 2008 financial crisis, Seychelles – plagued by recession – had found itself in default of payment.
Expected growth in 2020 : -13,8 %
Main source of revenue: Tourism
A southern African country mired for more than two decades in a severe economic crisis (galloping inflation, shortages of many basic necessities …), Zimbabwe sank even further into the abyss in 2020, in the wake of the coronavirus pandemic, an unusual drought and economic recession. As a result, nearly 60 percent of the population could be food insecure by the end of the year, according to the World Food Programme (WFP). The end of the tunnel is not for tomorrow…
Expected growth in 2020 : -10,4 %
Main source of revenues: Raw materials (Gold, Platinum, Tobacco….)
Botswana, a good student of the African economic class, will nevertheless experience a terrible year in 2020. This is due to the disproportionate weight of its diamond industry (36% of GDP) and its heavy dependence on the Indian cutting and polishing industry, which literally froze during the March-April lockdown. This is a hard blow for the world’s second largest carat producer (behind Russia), which must more than ever accelerate its efforts to diversify its economy.
Expected growth in 2020 : -9,6 %
Main source of revenue : Raw materials (Diamonds, Nickel….)
5. South Africa
As the continent’s leading industrialized economy and a major mining power, South Africa is still on the brink. While the Southern African giant has been multiplying economic underperformance for years, the forecast for 2020 is simply catastrophic (-8%), with the decline being mainly strong in agriculture, manufacturing and mining, which have seen their activity fall to historic proportions in the wake of the coronavirus pandemic. One more difficulty for a country which, almost 30 years after the end of Apartheid, is still struggling with its demons (social inequalities, unemployment, crime…).
Expected growth in 2020 : -8 %
Main sources of revenue : Mining, Agriculture, Tourism, Financial services