Africa: A New Emerging Market

The African continent has always been characterized by its numerous unique features and potential, which it struggles to express in economic and commercial terms. It is a land of infinite natural resources but with challenges that are difficult to resolve. However, in recent years we have witnessed economic growth in Africa second only to Asia. Africa confirms itself as a continent of many facets. The eight countries of the WAEMU – the West African Economic and Monetary Union – are growing significantly. In 2024, the WAEMU achieved economic growth of 6.3% and expects to close 2025 at 6.7%. Their annual inflation rate is decelerating, reaching 3.5% last year, also thanks to the reduction in tensions over food and energy prices. By 2025, it will settle at 3%. The African continent as a whole, however, is expected to grow by 3.4% in 2024, 3.7% in 2025, and is forecast to exceed 4% in 2026. The International Monetary Fund, in publishing this year’s forecasts for the continent’s major countries, naturally places South Africa at the top: it has always been the economic leader for historical reasons, with an estimated GDP of $410 billion. Then come two Mediterranean countries: Egypt ($347 billion) and Algeria ($269 billion). In fourth place (with a GDP of $188 billion) is the most populous country: Nigeria, affected by hunger, floods, and terrorism, but which remains Africa’s leading oil exporter. Morocco ($166 billion) follows, followed by Tanzania ($132 billion), Ethiopia ($117 billion), Angola ($113 billion), Ivory Coast ($94 billion), and Ghana ($88 billion).

When we hear about emerging economies, we all think of Asian economies and sometimes Latin America. Perhaps we now need to get used to including some African countries.

African growth might seem like a brief, coincidental interlude. In the remainder of my analysis, I will try to explain how African growth could be lasting and lead the continent toward a new future and a new image of its territory; a territory not only of natural beauty and landscapes but also of great opportunities.

Africa is home to the world’s youngest and fastest-growing population. With its population expected to nearly double to 2.5 billion people by 2050, the continent presents myriad opportunities for robust, inclusive growth that harnesses its rich natural resources and abundant human potential to increase prosperity not only in Africa but around the world.

These strengths and resources offer the continent the opportunity to significantly improve its productivity and reverse the economic slowdown it experienced from 2010 to 2019. During that period, GDP growth fell by 35 percent, and the COVID-19 pandemic was added to the mix.

Africa has attracted significant foreign direct investment in recent years. China has invested heavily in the Sahara Desert and has, for example, decided to focus on railways (the Addis Ababa-Doraleh line with Ethiopia gaining access to the sea. The trains cross the border and arrive at the port of Djibouti). Large multinationals have invested heavily in Africa: in Morocco, Stellantis wants to double its production at the Kenitra plant, with €1.2 billion on the table. Morocco is also currently underway to build the NMGP gas pipeline connecting it to Nigeria: a 5,000-kilometer pipeline transporting nearly 30 billion cubic meters of gas per day, with a total cost of $20 billion. This project, launched in 2016 at the initiative of King Mohammed VI, aims to create an infrastructure capable of connecting the Mediterranean (and therefore Europe) with the Gulf of Guinea (and the southernmost part of the Atlantic). But these are just some of the investments centering on the continent.

As is well known, Africa’s rich territory is characterized by a variety of natural resources, such as gold, precious stones, oil, cocoa, and timber, which are crucial to the economies of many countries. However, the distribution of these resources is often unequal and does not involve the local population in the economic benefits. Experts have recently identified the African continent as one of the richest in rare earths, which, from a strategic and commercial perspective, are also crucial to geopolitical balances.

Africa’s economy has undergone profound structural change, shifting toward services over the past 20 years, as people have left agricultural labor for jobs in trade and other services in cities. Reflecting this shift, employment in services has increased from 30 percent to 39 percent over the period, although in 2019, half of Africa’s workforce remained in agriculture. Looking ahead, the continent has the human capital and resources needed to stimulate growth and increase productivity across all sectors, starting with the services sector. Services have consolidated their role as the continent’s main driver of economic output, contributing 56 percent in 2019, compared to 50 percent in 2000. The sector represents significant opportunities for African countries to increase economic output and job creation, but only if productivity can rise and Africans can make the most of their land.

A list of characteristics has been drawn up that can undoubtedly lead Africa to a virtuous path of economic and social growth. However, despite these positive characteristics, African countries also face a series of challenges that are difficult to resolve: political instability, high levels of corruption, internal conflicts, low levels of education and others.

We are counting on the new ruling class and the growing desire for retaliation to usher in a new era for Africa.

By Domenico Greco