Kenya is set to be replaced as the third-largest economy in sub-Saharan Africa by Angola and Ethiopia, which will weaken the East African country’s ability to attract investors with its growing consumer base. According to projections by the International Monetary Fund (IMF), faster GDP growth in Angola and Ethiopia will see Kenya fall to fifth in sub-Saharan Africa’s economic rankings, with Nigeria remaining the largest economy on the continent.
A return to growth driven by higher oil prices allowed Angola to overtake Kenya last year, ending a period of recession. Ethiopia is also set to replace Kenya in the fourth spot, due to the continuation of economic reform efforts and the resolution of armed conflicts in the country.
The IMF predicts that the economies of Ethiopia and Angola will expand by 13.5 percent and 8.6 percent respectively in dollar terms, while Kenya is projected to have a slower growth of 2.4 percent due to the ongoing impact of the Covid-19 pandemic, drought, and disruptions in global supply chains.
This shift in rankings will likely impact Kenya’s ability to attract foreign direct investment, which is crucial for addressing youth unemployment in the region. South Africa and Ethiopia have already demonstrated success in attracting foreign investment due to their growing consumer bases. The IMF projects Kenya’s GDP to reach $117.6 billion this year, behind Nigeria ($574 billion), South Africa ($422 billion), Angola ($135 billion) and Ethiopia ($126.2 billion).
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.