Overview
June was marked by the implementation of a number of positive initiatives and economic policies in key markets in our focus countries and other key African markets. If these policies and initiatives are executed effectively, H2 2023 will show significant growth and improvements across board. In the interim, there were notable changes in the metrics of our focus countries from prior periods.
GDP:
The Government of Egypt has not updated its figures (from Q4 2022), but it is not expected to be impressive as the economic crisis worsens as it continues.
Ghana recorded a significant improvement – 4.20% from 3.70% in Q4 2022 – primarily led by a boost in revenue from Services ($1.85b). Kenya declined – 5.30% from 6.20% in Q4 2022 – due to a weak performance in Construction and Manufacturing.
Morocco had the most impressive improvement – 3.50% from 0.50% in Q4 2022 – primarily led by a major boost in revenue from Services ($17b) due to the significant uptick in the income from Tourism between January and May 2023.
The Government of Nigeria has not released its Q2 2023 report but is expected to grow due to the resumption of economic activities post-elections, surplus cash in the system, and savings from the discontinued PMS subsidy. There was a dip in Q1 2023 due to the cash crunch earlier on in the year, as well as significant losses in revenue due to oil theft.
Inflation:
Similar to numerous countries around the world, most African countries have been battling inflation to varying degrees; some with some success, while it continued to worsen for others. Inflation increased across the board with the exception of Kenya (stagnant at 7.90%) and Morocco (declined to 7.10% from 7.80%) due to relative economic stability and record-high Tourism figures respectively.
In Egypt, inflation rose by 210 bps (30.6% to 32.7%) in May; the highest in the group. This was followed by Ghana, which rose by 100 bps (41.2% to 42.2%) in May. Inflation in Nigeria barely rose in May – 19 bps (22.22% to 22.41%).
Interest:
Higher interest rates have been the response of most African central banks to inflation over the last few months. Interest rates were maintained across the board, with the exception of Kenya which increased its rate from 9.50% to 10.50% in May 2023. The Bank of Ghana did not release a new rate for June 2023, 29.50% was likely maintained from May 2023. Egypt and Morocco maintained their rates at 18.25% and 3% respectively from May 2023. The Central Bank of Nigeria also did not release a new rate for June 2023, so 18.50% was likely maintained from May 2023.
Unemployment:
Unemployment rates have not been updated across board. However, as last reported, they have mostly been stagnant or fairly elevated. The only exceptions were Egypt and Kenya which showed a slight increase unemployment figures. Nigeria has the largest percentage due to the sheer size of its population, particularly its youth population.
Overall, there is always room for growth and continuous improvement with more opportunities to invest in promising African tech solving big problems, whilst securing excellent returns for investors. A total of about $80million was invested across Africa in June, primarily in Nigeria. The most investments were made by the CcHub Mastercard Foundation Edtech Fellowship, a program between Co-Creation Hub and Mastercard Foundation, while the largest investment was made by AXA Investment Managers. FinTech investments were minimal, with more focus on CleanTech, eCommerce, EduTech, and Logistics.
