The IMF predicts that due to Angola and Ethiopia’s quicker GDP growth, Kenya will drop to fifth place in sub-Saharan Africa’s economic rankings. While it is anticipated that Nigeria would continue to have the largest economy on the continent, Angola’s return to growth, which is tied to rising oil prices, allowed it to pass Kenya last year and put an end to years of recession.
The lessening of the country’s armed conflict and the continuing of ambitious economic reform initiatives aimed at opening up one of Africa’s fastest-growing but most closed economies, on the other hand, are what will cause Ethiopia to overtake Kenya as the continent’s fourth-place nation this year.
This year, the IMF projects that the economies of Ethiopia and Angola will grow by 13.5% and 8.6%, respectively, in terms of dollars. However, due to the Covid-19 pandemic’s aftereffects, drought, election-related anxiety, and the interruption of global supply lines caused by the Russia-Ukraine war, Kenya is predicted to expand at a slower rate—2.4%—during the review period.
It’s important to note that Kenya’s drop to fifth place may undermine its position in the competition for foreign direct investment (FDI), which is essential for reducing the continent’s rising rate of youth unemployment. With investors eyeing a populace that has more money to spend, South Africa and Ethiopia have so far done better than Kenya at luring foreign investment. In comparison to Nigeria ($574 billion), South Africa ($422 billion), Angola ($135 billion), and Ethiopia ($126.2 billion), the IMF expects Kenya’s GDP to reach $117.6 billion this year.
As millions of Africans strive to escape extreme poverty, multinational corporations are becoming more and more interested in Africa as a market with a variety of prospects, including mobile phones, vehicles, food, and clothing as well as financial services and entertainment.
Angola, which is oil-rich, will take back the third spot it lost to Kenya in 2020 after years of shrinkage due to a drop in oil prices. Angola is the world’s seventh-largest producer of rough diamonds, according to Kimberley Process data, and is OPEC’s second-largest oil producer on the continent after Nigeria. According to the World Bank, Angola’s GDP rose by 0.7% in 2021 after five years of decline.