Sub-Saharan Africa Monthly Outlook

2024 Macro Key Themes

January 2024
Disclaimer

This commentary is published by BMI – A Fitch Solutions Company, and is not a comment on Fitch
Ratings' Credit Ratings. Any comments or data included in the report are solely derived from BMI and
independent sources. Fitch Ratings analysts do not share data or information with BMI.

7
Contents
3. Headline Growth In SSA To Accelerate

4. Monetary Easing Gets Under Way

5. Fiscal Pressures Will Persist

6. Worsening External Accounts will Lead To Currency

Depreciations

7. Policy Continuity Will Prevail, Despite Important

Changes

8. Security Risks On The Rise

9. BMI Versus Bloomberg Consensus

11. Data Pack

Headline Growth In SSA To Accelerate
East & Central Africa Will Drive Growth, Again Growth Returning Closer To Pre-Covid Levels
Selected Markets – Real GDP Growth, % SSA – Real GDP Growth By Sub-Region, %

2023e 2024f SSA East & Central Africa

10 West Africa Southern Africa
9 10-year (pre-covid) average
8
8
7
6 6
5 4
4
3 2
2 0
1
-2
0
-4

Kenya
Namibia

South Africa

Ghana
Cote d'Ivoire

Nigeria
Angola

Ethiopia

DRC
Senegal

Rwanda
-6

2014

2023e
2015

2016

2017

2018

2019

2020

2021

2022

2024f
• Growth in SSA will accelerate to 3.7% in 2024, from an estimated • East Africa will be locus of economic growth, with markets like
2.8% in 2023. We expect large markets to support overall growth Ethiopia, Rwanda and the DRC experiencing growth above 6.0% y-o-
in 2024, in contrast to 2023, when Nigeria and South Africa both y. Growth will be driven by private consumption , as falling inflation
dragged on regional expansion. boosts purchasing power, and higher fixed investment growth.

e/f = BMI estimate/forecast. Source: UN, local sources, BMI e/f = BMI estimate/forecast. Source: UN, local sources, BMI

3
Monetary Easing Gets Under Way
Inflation To Slow But Remain Above Long-Term Average Moderate Monetary Easing To Commence Across SSA
SSA – Consumer Price Inflation, % ave Selected Markets – Central Bank Policy Rate, %

Historical 2014-2023 average 2024 average 2022 2023 2024f

20 30
18 25
16
14 20
12 15
10 10
8
6 5
4 0
2

Kenya

Uganda

Tanzania
Ghana

South Africa

Namibia
Nigeria

DRC
Zambia
Angola
0

2023e
2014

2015

2016

2017

2018

2019

2020

2021

2022

2024f
• We expect that inflation will trend downwards in 2024, mostly on • We expect that sluggish economic growth in markets such as
account of strong base effects and easing fuel prices. South Africa, Ghana and Nigeria will encourage a shift to more
accommodative monetary conditions in 2024.
• Whilst price growth will remain above the long-term trend, we
expect sustained disinflation to incentivise major SSA markets to • Currency stability and a dovish pivot in developed markets will
shift toward monetary easing. also support interest rate cuts in the region.

e/f = BMI estimate/forecast. Source: Macrobond, BMI e/f = BMI estimate/forecast. Source: local sources, BMI

4
Fiscal Pressures Will Persist
SSA Markets Will Continue To Record Large Fiscal Deficits Debt-Servicing Costs Will Stay High As Payments Loom
Selected Markets – Fiscal Balance, % Of GDP SSA – Interest Payments , % Of GDP

2022 2023e 2024f 2010-2019 ave SSA SSA (excl. South Africa)
0 80
-2 70
-4 60
-6 50
-8 40
-10 30
20
-12
10
Kenya
Ghana

South Africa

SSA

Nigeria
Ethiopia
0

2017

2023e
2024f
2025f
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

2018
2019
2020
2021
2022
• We expect that governments in SSA will continue to face severe fiscal • We also note that the region faces a wall of Eurobond principal
pressures as debt-servicing costs remain elevated. payments in the coming years.
• Poor global risk appetite and market-specific factors will keep bond • This will exert further downward pressure on the region's already-
yields elevated, effectively locking countries out of international stressed currencies, as governments face further dollar liquidity
capital markets. constraints.
e/f = BMI estimate/forecast. Source: Local sources, BMI e/f = BMI estimate/forecast. Source: Macrobond, BMI

5
Worsening External Accounts Will Lead To Currency Depreciations
Weakening Trade Balances Will Worsen External Accounts FX Weakness Will Continue Across SSA
Selected Markets – Change In Trade Balance In 2024f, % Of GDP Selected Markets – Exchange Rate, USD per LCU, % Change
5 2023e 2024f
4
0
3
-10
2
1 -20
0
-30
-1
-2 -40
-3 Kenya
-50
South Africa
Tanzania

Uganda

Ghana
Botswana

Nigeria

Zambia
Angola

Cameroon

Cote d'Ivoire
Ethiopia

Mozambique
Senegal

Kenya

Tanzania

Ghana
South Africa
Nigeria

Zambia
Angola

DRC
Ethiopia
• Elevated external debt payments will continue to put pressure on • Weakening trade balances and elevated external debt repayments
primary income accounts in many countries across the region. will see demand for foreign exchange strengthen in 2024.
• We project that average SSA external debt as a share of GDP will • This will put pressure on international reserves, limiting the ability
reach 61.2% in 2024, from 53.6% in 2018. This will keep external of central banks to defend their exchange rates. We therefore
debt servicing high and lead to elevated primary income outflows. expect to see continued pressure on SSA currencies in 2024.

Note: BMI forecast (f). Source: Macrobond, BMI e/f = BMI estimate/forecast. Note: Refers to forecast average. Source: Local sources, BMI

6
Policy Continuity Will Prevail, Despite Important Changes
Incumbent Wins Will Support Policy Continuity Support For Legacy Party To Fade
SSA – Map Showing 2024 Realised And Expected Election Outcomes South Africa – Voting Intentions, % Of Total Respondents

ANC DA EFF ActionSA IFP 60

50

40

30

20

10

Jan-20

Jan-21

Jan-22

Jan-23
Jul-20

Jul-21

Jul-22

Jul-23
Apr-20

Apr-21

Apr-22

Apr-23
Oct-20

Oct-21

Oct-22

Oct-23
• We expect policy continuity to prevail in 2024, with incumbent • High unemployment, persistent blackouts and corruption scandals
wins forecast for a majority of markets with planned elections. in South Africa have eroded support for the ruling ANC.
• That said, we expect important changes in markets like South • Support for the ANC fell below 50% in the November 2021
Africa, Namibia, and Ghana, where ruling parties stand to lose municipal elections, informing our forecast that it will lose its
their majorities, or lose outright. parliamentary majority in this year’s general elections.
Note: Markets in dark blue = incumbent wins, red = incumbent loses, light blue = incumbent Source: Electoral Commission of South Africa, Ipsos, Afrobarometer, South Africa Institute of Race
wins but loses majority. Source: BMI Relations, Intellidex, Rivonia Circle, Brenthurst Foundation, Social Research Foundation, BMI

7
Security Risks On The Rise
Mali And Burkina Faso Present Clear Spillover Risks
West Africa – Map Showing Spillover Risks

• We expect that the withdrawal of UN peacekeepers from Mali will

weigh significantly on the security outlook for the Western Sahel.
• We anticipate that a significant security vacuum caused by the
withdrawal will enable powerful Islamist insurgent groups to
expand their influence.
• This presents clear spillover risks from the increasingly unstable
Sahel to littoral West African states such as Cote d’Ivoire, Ghana,
Togo and Benin.
• Similarly, in the DRC, we expect that the UN peacekeeping mission
will withdraw troops from the restive east of the country
throughout 2024.
• This will lead to a security vacuum in an area with an estimated
122 armed insurgent groups. As in Mali, this will not only severely
affect domestic Congolese security, but also sub-regional security.

Note: Markets in red = source of risks, pink = markets most at risk. Source: BMI

8
BMI Versus Bloomberg Consensus
2024 Real GDP Growth End-2024 Exchange Rate
% Currency
Market BMI Bloomberg Consensus Consensus Last Month Currency BMI Bloomberg Consensus Consensus Last Month
Angola 0.60 2.15 2.20 AOA per USD 1,000.00 - -
Botswana 5.00 3.65 3.65 BWP per USD 14.46 - -
Cameroon 4.52 - - XAF per USD 585.68 - -
Congo (DRC) 6.38 - - CDF per USD 2,791.25 - -
Congo-Brazzaville 4.65 - - XAF per USD 585.68 - -
Côte d'Ivoire 6.72 6.35 6.35 XOF per USD 585.68 - -
Equatorial Guinea -1.27 - - XAF per USD 585.68 - -
Ethiopia 6.82 6.05 6.10 ETB per USD 80.00 - -
Gabon 5.12 - - XAF per USD 585.68 - -
Ghana 3.53 3.55 3.60 GHS per USD 11.40 13.20 13.20
Kenya 5.15 5.00 5.00 KES per USD 165.07 160.00 155.00
Mozambique 4.28 4.70 4.70 MZN per USD 63.90 - -
Nigeria 2.92 3.40 3.00 NGN per USD 850.00 875.00 850.00
South Africa 1.73 1.30 1.25 ZAR per USD 20.00 18.25 18.50
South Sudan 1.29 - - SSP per USD 1,213.63 - -
Sudan -4.01 - - SDG per USD 775.00 - -
Tanzania 5.36 - - TZS per USD 2,600.00 - -
Uganda 5.52 5.90 6.00 UGX per USD 3,853.20 3,550.00 3,550.00
Zambia 4.80 4.00 4.00 ZMK per USD 22.70 - -
Zimbabwe 3.25 - - ZWL per USD 7,800.00 - -
Note: Last updated: January 18 2024. Revisions to BMI forecasts have since been made. Source: Bloomberg, BMI

9
BMI Versus Bloomberg Consensus
2024 Average Inflation End-2024 Policy Interest Rate
% %

Market BMI Bloomberg Consensus Consensus Last Month Market BMI Bloomberg Consensus Consensus Last Month
Angola 17.10 20.10 19.00 Angola 18.00 - -
Botswana 3.80 3.50 3.50 Botswana 2.40 - -
Cameroon 4.30 - - Cameroon 4.00 - -
Congo (DRC) 16.51 - - Congo (DRC) 10.00 - -
Congo-Brazzaville 3.45 - - Congo-Brazzaville 4.00 - -
Côte d'Ivoire 3.10 2.00 2.00 Côte d'Ivoire 5.00 - -
Equatorial Guinea 3.25 - - Equatorial Guinea 4.00 - -
Ethiopia 18.50 24.50 23.00 Ethiopia 7.00 - -
Gabon 2.40 - - Gabon 4.00 - -
Ghana 17.85 18.30 18.40 Ghana 22.00 22.75 22.75
Kenya 5.80 6.80 6.70 Kenya 11.50 9.50 9.50
Mozambique 4.81 5.90 5.90 Mozambique 16.25 - -
Nigeria 26.49 23.70 24.50 Nigeria 17.75 20.20 20.20
South Africa 4.70 5.00 4.90 South Africa 7.25 7.40 7.40
South Sudan 11.75 - - South Sudan - - -
Sudan 60.00 - - Sudan - - -
Tanzania 3.30 - - Tanzania 6.00 - -
Uganda 3.65 4.70 4.80 Uganda 8.50 - -
Zambia 10.15 9.60 9.60 Zambia 10.50 - -
Zimbabwe 32.00 - - Zimbabwe - - -
Note: Last updated: January 18 2024. Revisions to BMI forecasts have since been made. Source: Bloomberg, BMI

10
Data Pack
Real GDP Growth, % (2023-2028 Average) Consumer Price Inflation, % (2023-2028 Average)
7 25
6
20
5
4 15
3 10
2
1 5
0 0

Zambia

Nigeria

South Africa
Kenya
Cote d'Ivoire

Tanzania

Nigeria

Zambia

South Africa
Kenya

Cote d'Ivoire
Tanzania
Current Account, % Of GDP (2023-2028 Average) Budget Balance, % Of GDP (2023-2028 Average)
0 6
-1 4
-2 2
-3 0
-4 -2
-5 -4
-6 -6

Nigeria

Zambia

South Africa

Kenya
Tanzania

Cote d'Ivoire
Nigeria

Zambia

South Africa
Kenya
Cote d'Ivoire
Tanzania

Note: All figures are BMI forecasts. Source: National sources, IMF, UN, BMI

11
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FR 16x9 2019 v13

This commentary is published by BMI – A Fitch Solutions Company, and is not a comment on Fitch Ratings' Credit Ratings.
Any comments or data included in the report are solely derived from BMI and independent sources. Fitch Ratings analysts
do not share data or information with BMI.

Copyright © 2024 Fitch Solutions Group Limited. All rights reserved.

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