Africa's economic hotspots

  • Written by 
  • 09/04/2014

Based on its growth profile, economists the world over are pointing to Africa as “the next Asia”. But not unlike Asia, the continent’s many different nations have contrasting outlooks, with 2013 growth rates that range from negligible to double figures. International Wealth identifies the African countries with the hottest prospects.

Mobile Africa signals its potential 4 of 4 The making of affluent Africa 2 of 4

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Africa is being tipped as the global economic growth engine of the next decade, expected to run faster than any of the world’s current economic powerhouses, including China, Brazil and India. But a handful of countries across the vast continent stand out as the source of the greatest economic opportunity, not just for Africa’s entrepreneurs, business leaders and increasingly affluent classes but for investors around the world,

Based on fast-improving infrastructure, abundant mineral wealth, rising productivity, a growing consumer base, strengthening political stability, and other key measures, we highlight some of Africa’s hottest economies and the underlying reasons for their ascendancy.


A recent feature in the country’s Nation newspaper, headlined “The rise and rise of Kenya’s middle class”, summed up how the definition of middle class in East Africa’s most affluent state has changed in the last few years. “Running water, hot shower and two or three electronic gadgets” used to be the badges of prosperity, it observes; now owning luxury cars, Italian kitchens and subscription TV channels are the credentials of the new middle class.

Kenya’s up and coming affluents eat in expensive restaurants, drink premium brand whisky and live on private estates, usually in the capital, Nairobi, frequently travelling outside the city to holiday homes on the country’s ritzy coast or to visit its National Parks and game reserves. The status symbols of this new cohort include smaller families, double incomes, university degrees and private education for their children.

Sales of cars have more than doubled in a decade, according to the latest census figures, and upmarket property prices have soared. A 2012 report by international property specialist Knight Frank ranked Nairobi as the world’s top-performing prime residential market, showing a 25% annual rise in premium house prices. And even its latest figures released in early 2013 show demand for luxury property in the country is roaring ahead at 10% per year. It’s a similar story for Kenya’s coastal hubs – Malinda, Lamu and Mombasa – where price growth was 20% in 2011.

But the boom extends beyond residential property. Nairobi has become a city of gleaming skyscrapers, where many multinational companies base their regional headquarters and where there is a coffee house culture that would rival that of any European or American city.

That prosperity is not tied to any single source, but from Kenya’s position as the commercial hub of East Africa, with many in its growing middle class employed in sectors such as finance, communications and transportation. Agriculture – with tea and coffee among the top exports – is also a major earner, as is tourism.

But, in a less traditional vein, the country also deservedly renowned as a major source of innovation, notably in mobile technology and mobile finance (see article, ‘Mobile Africa displays its potential’). Indeed, almost a quarter of the country’s population uses their mobile phones for banking.

As Africa’s second most developed economy after South Africa, Kenya is already favoured by many outside investors and multinational companies as an entry point to the continent.

And after Kenya’s general elections in March 2013 passed off peacefully (in contrast the widespread violence witnessed in 2007’s poll) newly elected President, Uhuru Kenyatta, has promised the government will create a million jobs each year, mostly aimed at the country’s vast pool of young people (62% are under 25). That, coupled with a degree of post-election stability, has some observers suggesting that the widely predicted growth rate of 4.9% for 2013 is beginning to look conservative.

From 2000 to 2013, per capita GDP in Nigeria quadrupled, leading to a rapid increase in the consumer spending


If there is one country that sums up the rising promise of Africa, it is Nigeria. With an estimated 160m-plus people, the West African country is already the continent’s most populous – one in five of those living in sub-Saharan Africa residing in the country.

The African Development Bank predicts Nigeria’s economic growth will hit 6.8 per cent in 2013, and it is already close to overtaking South Africa as the biggest economy in Africa. But looking further down the road, economic models run by management consultancy PwC predict Nigeria will be the world’s 13th largest economy by 2050 – the only African economy in the global top 20.

Dominating growth profile is Nigeria’s massive oil reserves – the 10th largest in the world, which provide a source of wealth that is underwriting large-scale government spending and ultimately trickles down to almost every area of society.

Centred on Lagos, one of the most vibrant – if chaotic – cities on earth, Nigeria also has a substantial financial and banking sector, including the continent’s second biggest stock exchange (after Johannesburg). And it is shedding its previous dependence on agriculture to move into new areas, including telecommunications, technology and manufacturing. And as a badge of its modernising agenda, the African nation boasts an established space programme, having launched five satellites over the past decade.

Driven by its industrial growth, Nigeria is seeing a rapid rise in consumer spending. Its more affluent citizens are already renowned as some of the world’s most enthusiastic shoppers – both at home and abroad. They are the fourth-biggest overseas spenders in the UK, for example. And many major international brands see Nigeria as a big opportunity because of its demographics (63% of the population is under 25) and fast-growing middle-class.

Mark Livingstone, from fund manager Fidelity, for example, highlights a transformation in spending power. “Between 2000 and 2013, per capita GDP in Nigeria quadrupled from $400 to $1,600. That’s not enough for most people to buy luxury goods, but it is leading to a rapid increase in the consumption of goods like food and beer.” Heineken, for example, which owns a majority stake in Nigerian Breweries, now sells more of its beer in the country than anywhere else in the world, apart from Mexico.

Retail is also developing fast, with South Africa-headquartered Massmart – owned by the US’s Walmart – having announced plans to open 20 stores in Nigeria, and Shoprite (Africa’s biggest chain and also with its roots in South Africa) foreseeing the scope for as many as 700 stores across the country.

But alongside the opportunity, Nigeria is not without its challenges. Among the most pressing of these is a shortage of electrical power, gridlocked roads in urban areas, widespread corruption and sectarian unrest in the north of the country. But with the government planning unprecedented investment in infrastructure, and companies such as the US’s General Electric planning to pump a $1bn into the economy by building oil and power-related manufacturing capacity, Nigerians can be rightly confident that a prosperous future lies ahead.


The former Portuguese colony endured more than a decade of civil war following its independence in 1975, but since multi-party democracy was established in the mid-1990s, Mozambique has progressively emerged as one of Africa’s most promising nations – thanks in large part to massive energy resources. Most important are two huge gas fields which are expected to generate hundreds of billions of dollars in the coming years; but Mozambique also has enormous coal deposits and is predicted to become the world’s largest exporter of coal within a decade.

Not surprisingly, there has been a rush to take part in the development of these resources with Chinese, Indian and Brazilian companies in strong evidence, together with a substantial number of Portuguese who have moved to Mozambique as their prospects at home have dwindled.

That in turn is leading to a development boom with hotel, shopping mall and business centre projects all underway. This is particularly the case in Tete, in the remote northwest, where Brazilian company Vale is bringing coal mining capacity on stream. Pemba, on the coast close to the northern oil fields, is another boom town in the making. But mineral wealth is not the only driver of growth.

Tourism is proving a strong catalyst for development: Mozambique is one of the most attractive destinations in Africa, with many unspoilt beaches down much of its coastline. Transport links are improving: for example, British Airways launched a new daily service from Johannesburg to Maputo in May 2013.

Nevertheless, the bulk of Mozambique’s population remains poor for now, and the question is whether its estimated 24m people will benefit from the trickle-down of this energy wealth. The country has traditionally had a smaller middle class than many other African countries. But that is changing fast.

Last November, for example, the government hosted ‘Mozambuild’, a conference and exhibition designed to of get construction companies to invest in housing for the emerging middle class. But even before that starts to bear fruit, there is plenty of evidence that the real estate market is taking off, with some South African estate agents already moving in to market new property developments in the capital Maputo, as well as luxury coastal villas.

In terms of commercial property, Maputo’s skyline has been redrawn in just a few years, with the country’s tallest building yet, the 47-storey Maputo Business Tower, due for completion in 2013. The newly opened Radisson Blu hotel is the city’s second five star hotel, but a recent bank survey suggested that 30 luxury hotels are needed to meet demand. And that is added to by developments like the Montanhana Golf and Marine estate. For Mozambicans, this is all symptomatic of a rising affluence and a rising middle class.


Ghana, one of the most stable democracies in Africa, has attracted a good deal of interest from overseas investors as a paragon in West Africa ‘where things just work’. With a population of just 25m, the country is much smaller than nearby Nigeria and has some distinct advantages: the roads aren’t quite as congested and the electricity supply is more reliable (if far from impregnable).

Ghana markets itself to the world as the gateway to West Africa – and has made considerable efforts to easy the processes of creating new businesses, something helped by a legal system based on English law and the English language (a legacy of its time as a British colony, when the country was know as The Gold Coast). Today, Ghana has one of the strongest relationships of any African country with China, dating back to the 1960s, links that have delivered it considerable benefits in recent years in terms of investment.

The country’s growth rate has beaten the African average for six years in a row, topping out at a stunning 14 % in 2011, before settling back to 8.3 % in 2012, according to the African Development Bank. One factor expected to give a further boost to the economy is that, like Nigeria, Ghana has oil, with major offshore reserves discovered in 2007.

To this point, though, the economy has been marked by its diversified – at least compared to some of its African neighbours – with cocoa (its chief export), gold and other natural resources, on the one hand, and service-based industries ranging from tourism to logistics on the other.

There’s also a strong banking sector in the capital, Accra, and Ghana’s Tema port is noted for being the largest man-made harbour in Africa, serving several landlocked countries such as Mali and Niger, as well as Ghana’s own needs.

One new potential export is electricity: the Akosombo Dam, built under the initiative of late President Kwame Nkrumah, is a major source of hydro-electric power and the government has announced its intention to start selling electricity to Nigeria by 2015.

Accra has evolved into a cosmopolitan city of 2.3m people, with a rapidly expanding housing market where upscale gated developments and other high-quality properties command prices comparable to those in Europe. Its Accra Mall, which opened in 2008, is one of West Africa’s top shopping centres, with 3,500 sq metres of retail space, multiple restaurants and a cinema complex.

Such developments are not only a strong draw for Ghana’s burgeoning middle class but have also encouraged some of the Ghanaian diaspora – including entrepreneurs and business executives who have worked in the UK or the US – to bring their expertise back home. And that is something that can only bode well for its future.

20% of South Africans are ‘stable middle class’, with half of that number black south Africans

South Africa

South Africa’s economy is both the continent’s largest (only Egypt and Nigeria come close) and its most mature, with a per capita GDP of at $8,000 that is more than double the African norm. The presence of a historically prosperous white minority has obvious influence over those numbers, making South Africa something of an economic anomaly in the continent.

South Africa is one of only four countries in Africa ranked as having an ‘upper-middle economy’ by the World Bank (the others are Mauritius, Gabon and Botswana). As well as its famed strengths in mining and agriculture, it is the natural headquarters for most international businesses in sub-Saharan Africa, and has buoyant business services, banking, telecoms and tourism sectors, as well as the continent’s biggest manufacturing base by far.

The automotive industry is a prime example. BMW, Ford, Volkswagen, Daimler-Chrysler, General Motors and Toyota all have production plants in the country, together producing half a million cars a year. In consumer goods, South Africa is still the launchpad for pan-African campaigns for every kind of product, and its retailers like Shoprite, Massmart and Pick n Pay all have ambitious plans to extend their reach even further across the continent.

At 3.6%, the country’s predicted growth rate for 2103 may not be as spectacular as some other African countries, but it is springing from a much more prosperous base. According to the African Development Bank, around 20 % of South Africa’s population is ‘stable middle class’ – some 10m people.

Around half of that group is black, with the biggest concentration in Johannesburg. And that points to a watershed in the country’s economy: whereas most premium services and products were previously aimed largely at the white population – upmarket homes, banking, restaurants, consumer electronics and so on – the growing black middle class is now seen as a driving force in the economy.


Among the countries of southern Africa, Zambia has in recent years been regarded in international circles as a star performer, for its political stability, reformist agenda and efforts to alleviate poverty.

At the end of 2010, the World Bank identified the country as one of its top ten economic reformers, having shown three years of solid growth throughout the global financial crisis. The Bank’s current verdict notes that, “the peaceful general election held in 2011 further strengthened the country’s democratic credentials and underscored the country’s enormous economic potential grounded in its rich endowment of natural resources that include abundant land and water.” Economic predictions put the country’s GDP growth for this year and next at around 7%.

Zambia’s great natural resource is copper. It is Africa’s biggest producer and one of the top ten in the world, and the country has benefited in recent years from the sharp rise in copper prices. The government has been making strenuous efforts to diversify beyond the metal, at the same time as trying to reform the economy and dismantling the stifling bureaucracy built up during decades of socialist rule (which came to an end in 1991).

Apart from mining, the other big earner in Zambia is agriculture, and economists have noted that the Southern African state is surrounded by eight countries which are all net food importers. Tourism and hydro-electric power are other strategic priorities.

Zambia’s middle class lives mainly in the capital, Lusaka, where the usual indicators of supermarkets, restaurants, and large numbers of cars are in evidence. The country’s first major shopping mall, Levy Junction, opened in December 2011. In a country where per capita income is low – $1,400, according to the International Monetary Fund – middle class families still are typically able to make use of private education, private healthcare and often can afford to employ domestic servants.

Zambia, though, is a country of both opportunities and challenges. An entrepreneurial culture and stability co-exist with relatively poor transport and telecoms infrastructure and a still-high prevalence of HIV inflection.