After many decades of struggling economy, it came as refreshing when Africa was bequeathed with fast-growing economy and a region with the youngest population. This growth has been attributed to the current economic prosperity across the continent. The World Bank’s Global Economic Prospects compiled a list of six countries in Sub-Saharan Africa that project the highest compounded annual growth rate. The growth, which was projected to rise further in the 2015-2016 period by 4.6%, and 5% in 2016-2017 will possibly be influenced by domestic demand, private consumption, constant infrastructure investment, and lower oil price.
It is also projected that Africa’s combined gross domestic product will be $2.6 trillion by 2020, according to Mckinsey Global Institute report (Roxburgh et al., 2010). This projection is seen in the rapid economic growth of African countries. A report by “Africa dot com Media Group” enlists African countries representing the fastest growing economy to include Rwanda, Ethiopia, Tanzania, Code D’Ivoire, Mozambique, and Democratic Republic of Congo (Mutema, n.d.). It should not come as a surprise when the continent’s big names such as Nigeria, South Africa, Egypt, Ghana, and Angola, to name a few, are not mentioned. The big economies have not been growing as fast as the six mentioned above (Rwanda, Ethiopia, Tanzania, etc.).
To understand the real story behind Africa’s fastest economic growth, a study conducted revealed a unique trait among those six countries. For instance, Rwanda is mostly a rural region with over 90% of its population depending on agro-processing, agriculture, and minerals. The major sources of foreign exchange in the country include tourism, coffee, tea, and minerals. Although the country suffered from the 1994 genocide, the economy seems to have recovered substantially. This is evident in the country’s GDP which is projected to grow by 7% in 2016 and 7.5% in 2017 (“Africa’s Fastest Growing Economies,” 2016).
Also, an IMF report in 2015 pointed out that the turn of events with Tanzania’s general elections which saw a change of government and policies, serve as a greater purpose in fostering investor confidence in that country. More so, with the new government making a commitment to 4.2% of GDP fiscal deficit target at end of 2016 (World Bank, 2016). The country has significantly completed its economic transition to a market-oriented economy even though major sectors such as banking, telecommunication, mining, and energy remain under state ownership. Further, Tanzania has experienced high growth rate following its gold production and tourism sector increase. Energy, banking, telecommunications, agriculture, and mining have all strengthened the country’s economy.
Whereas mobile money transactions (from all sectors) accounted for 52% of the country’s GDP in 2015, agriculture continues to be the backbone of Tanzania’s GDP. With nearly 30% (USD 13.9 billion) of the country’s GDP (Tanzania Invest “Tanzania Agriculture”, 2016), the sector employs more than 80% of the county’s people. The GDP for Tanzania is expected to grow by 7% in 2016, 7.1% in 2017, and 8.0% in 2020 (IMF, 2015).
To be continued…