This year will see several African countries consolidate their return to a growth trajectory in the aftermath of COVID, even as security challenges in the Horn and Sahel endure.
I: The Continent will continue on its post-COVID growth path despite enduring macro challenges. Countries under IMF programs will yield mixed results from fiscal consolidation and other stabilization efforts.
(1) African economies will dominate the list of the fastest growing economies in 2025, in a continuation of the post-Covid recovery. 44 African countries will grow faster than the global average (3.2%) this year. Among the best performers, Côte d’Ivoire, Tanzania, Senegal, Benin, and Rwanda remain terribly underrated as investment destinations. Rwanda is slowly but surely consolidating its position as a logistics hub and could do a lot more to attract talent from elsewhere on the Continent and beyond to power its business services and tech sectors. Benin continues to make strides in its textiles sector and has a massive untapped proximity-to-Nigeria premium. If you want to do business in Nigeria but want to avoid attendant political risks, Benin (or Togo) are the places to be. Notice that trade between these two nations and Nigeria is undercounted in official statistics due to the very high levels of informality (and smuggling) involved.
(2) Côte d’Ivoire and Tanzania present the perfect mix of sectoral drivers of growth — agriculture, hydrocarbons, infrastructure, logistics, banking, and telecoms (plus tourism for Tanzania). Based on the fundamentals, these two are currently slightly ahead of their neighbors Ghana and Kenya (which are the two other African economies most likely to experience real takeoff in the next 30 years).
In addition to being an election year, 2025 is the final year of Côte d’Ivoire’s 2021-2025 development plan — which guarantees that the government will maintain the rate of public capital spending at close to 7% of GDP. The ongoing cocoa boom will further boost private consumption, which will be the most important driver of Ivorian growth this year. Notably, Côte d’Ivoire just became the 76th shareholder of the EBRD (Benin joined in April 2024), a development that will most certainly increase the flow of capital into the country.
On its part, Tanzania boasts the strongest macroeconomic outlook in Eastern Africa. As of last year, it has dethroned Kenya as the regional leader exports into the East African Community (see earlier post on this healthy competition). Estimates suggest that its output is set to exceed Kenya’s over the next decade. Deficits will stay at below 3% of GDP. Public debt/GDP ratio will peak in 2025 and decline thereafter. Development spending comprises almost 40% of the budget, with government capex growth averaging almost 13% over the next two fiscal years. Similar to last year, Tanzania is the economy I’ll be most excited about in 2025. It is the hottest economy in the hottest region (and is also a member of SADC). Plus the degree of integration in the East Africa Community means that investments therein come with strong regional scalability into Kenya, Uganda, and Rwanda — all three of which will also be posting respectable growth numbers this year.
(3) Among the new hydrocarbon producers on the Continent, Senegal will be the most interesting economy this year. It started producing oil last year and will bring gas online this year from the GTA project. The new administration will also be eager to start implementing the Vision 2050 agenda which seeks to triple per capita income by championing eight economic zones across the country. To this end, the administration seeks to reduce energy costs by at least 60%, improve the business climate to encourage local value addition and manufacturing, improve Senegalese infrastructure, as well as aggressively invest in human capital.
The biggest risk, of course, is that Dakar will fiscally over-extend itself in anticipation of cash from oil and gas (see lessons from Ghana’s ruinous experience). It is absolutely crucial for policymakers to view the hydrocarbon sector simply as a means to lowering the cost of energy and to cushion public spending in extreme cases. It must not emerge as the main/only game in town. Human capital development, higher agricultural productivity, manufacturing, and infrastructure should be the real anchors of Vision 2050.
(4) One the biggest economic news of 2025 will be Ethiopia’s ongoing liberalization efforts. The government already opened up the telecoms sector. A stock exchange will open this year for the first time since the imperial era. And there are plans to open up banking following last month’s passage of a law allowing foreigners to acquire stakes in local banks. Shareholding by foreign investors will be limited to 30% for individuals and 40% for firms. Ethiopia desperately needs investments in industry, logistics (including in its new airport city in Bishoftu), agriculture, and business services as it seeks to rebuild its economy after almost a decade of turmoil. Opening up its banking sector is one way of attracting foreign cash. The World Bank will support these efforts with a $700m Financial Sector Strengthening Project (FSSP).
(5) Exchange rate risks will remain elevated this year despite the relatively high growth and an expected uptick in foreign direct investment flows into the region. Furthermore, the IMF’s fiscal consolidation programs and other stabilization measures will elicit backlash and achieve mixed results. Cleaning up the region’s debt distress mess will take time. In particular, attempts to balance the books via higher taxation will be opposed by households reeling from the effects of inflation and declining real earnings. A combination of high interest rates in the U.S. plus a stronger dollar will prolong the effects of the fiscal squeeze across the Continent.
(6) For the 35th year running, the Chinese foreign minister’s first trip abroad (January 5-11) in 2025 will take him to the Continent, with stops in Chad, Congo, Namibia, and Nigeria. The most important thing to watch this year regarding Africa-China relations will be growth in Africa’s agriculture exports and the extent to which the Continent’s economies exploit tariff-free access to the Chinese market. Trump’s return to the White House presents an opportunity to shake up Africa-U.S. relations for the better. I will be watching closely to see whether African countries can leverage the Trump administration’s energy policy to guarantee their own energy security in a world dominated by global policy entrepreneurs who prioritize climate mitigation over adaptation and economic growth in low-income countries.
II: Conflict and geopolitical tension in the wider Horn will dominate the headlines.
(7) Sudan’s catastrophic civil war will drag on in 2025. Over 100,000 people have been killed. Millions have been displaced. Several population centers are already experiencing famine. Meanwhile, both the Rapid Support Forces (RSF) and the Sudanese Armed Forces (SAF) continue to commit atrocities as they prosecute their respective scotched-earth campaigns. The conduct of the war so far raises uncomfortable questions about the possibility of stitching Sudan back together after the shooting stops. That the African Union has failed to stop this madness will forever be a source of deep shame.
It is unlikely that the United Arab Emirates’ promise (to the U.S. government) not to supply weapons to the RSF will have a bearing on the trajectory of the conflict (there are multiple ways to launder such support), although SAF appears to be building a little bit of a momentum. Peace talks will go nowhere. The policy posture of the new U.S. administration will slightly tip the scales in SAF’s favor due to its likely prioritization of Sudan’s participation in the Abraham Accords. Overall, at this point in time I see little chance of any other outcome except a Libya-type stalemate.
(8) The U.S. government will very likely recognize Somaliland. While I agree that Somalilanders have a strong case for independence, I think that recognition at this point in time would be a mistake (more on this in my next post). If it comes to pass, recognition will heighten geopolitical tension in the Horn. Ethiopia, Kenya, and the UAE will be obvious regional strategic beneficiaries. A rattled Somalia will then likely move even closer to Turkey, Egypt, and Eritrea; and become a more eager enabler of anti-Ethiopia machinations by Asmara and Cairo. A worsening of relations between Addis Ababa and Mogadishu will likely jeopardize the Turkish-brokered deal to include much-needed Ethiopian troops as part of the multinational force fighting Al-Shabaab. Ironically, the ensuing surge in Somali nationalism will likely boost support for Al-Shabaab.
(9) There is very little evidence that the quality of leadership and decision making in Mogadishu will improve this year. This means that reaction to international recognition of Somaliland will prioritize political theater over reality-based strategic thinking. By majoring on petty political squabbling, President Hassam Mohamud has frittered away most of the recent momentum against Al-Shabaab. Mogadishu’s control and influence in Jubaland, Puntland and much of central Somalia will be curtailed even further this year.
(10) In 2025 Ethiopia’s Abiy Ahmed will struggle to shed the “Mayor of Addis Ababa” epithet. Central government control across the country remains shaky, with rival ethnic militias continuing to challenge state authority especially in Amhara and Oromia regions. Abiy survives in part because there’s no obvious alternative and because his detractors are hopelessly divided. However, while most analysts like to focus on Abiy’s many flaws, Ethiopia’s fundamental political problem is the failure of the ethnic federalism project. The current settlement may have been essential for achieving post-Derg peace, but now it’s time to think of designing a new pro-growth federalism (not based on ethnicity) that will at once distribute democratic power to subnational units, while also eliminating zero-sum ethnic rivalry and conflicts.
III: There will be continued unwinding of françafrique in West Africa, while negotiations to avoid the breakup of ECOWAS will most likely fail.
(11) When I wrote about the end of françafrique in February of 2023, I did not anticipate the rapidity with which we would see France’s influence wane throughout its former colonies. First it was the Sahelian states asking the French to pack up and leave following (initially) popular coups. Then came two important coastal electoral democracies, Senegal and Côte d’Ivoire. While many observers found convenient reasons to dismiss the Sahel’s populist juntas (blaming Russian/Chinese disinformation was a popular copium), it is harder to do the same in the case of Senegal and Côte d’Ivoire.
In 2025 the two historical bastions of French presence in West Africa will effectively downgrade their relations with Paris in response to popular pressure. At this rate, the end of the CFA might not be a pipe dream after all. Of course the actions taken by Senegal and Cote d’Ivoire do not mean the end of all relations with France. The strong economic and cultural ties will remain. On its part, France has responded to the deterioration of relations with its former colonies by courting other African countries — most notably Nigeria, Kenya, and Ethiopia. The first Africa-France summit to be held outside of France will be in Kenya in 2026. Overall, more trade and investments and less neocolonial meddling from Paris wouldn’t be such a bad thing.
(12) Relatedly, ECOWAS will very likely break up in 2025, exactly 50 years after its founding. Following the expiry of their one year notice, Burkina Faso, Mali, and Niger (which jointly comprise the Alliance of Sahelian States, AES) look set to leave ECOWAS. Not even the six-month grace period from ECOWAS is likely to change the minds of the AES juntas. At first it seemed like the AES juntas were simply playing a game of chicken. However, it is increasingly looking like they sincerely want out. The juntas want to stay in power, and are keen on avoiding any entanglements with ECOWAS that would jeopardize that.
The nature of the potential exit also means that ECOWAS has a very weak hand — the AES has port access treaties with individual members of ECOWAS, not to mention freedom of movement of goods and people under the CFA currency union. All this will mean a relatively soft landing for AES. Lastly, the AES leadership and a non-trivial share their citizenry view ECOWAS as a French Trojan horse. The politically obtuse frequent private visits by Nigerian president Bola Tinubu to France (including the most recent state visit to Paris) have not helped matters. Nigerien authorities have smartly exploited Nigeria’s domestic (ethnic) politics to accuse Tinubu of planning to host a French military base in Maiduguri. The Nigerian military was forced to publicly deny the allegations.
Meanwhile, in 2025 the AES governments will struggle in their fight against jihadists. Indiscriminate violence from state security forces, mercenaries (including Russia’s Wagner), and community self-defense groups continue to push civilians into the arms of jihadists who, in many cases, are able to credibly style themselves as protectors.
(13) In 2025 African states in the Sahel and beyond will struggle to maintain peace and security, let alone provide other essential public goods and services. The region’s states have proven incapable of stopping insurgents and criminal networks in both rural and urban areas. On this subject, this overview from the Journal is worth reading. Even for those who disagree with the overall framing, the general trends are unmistakable. While the current situation is nothing like Kaplan’s “coming anarchy” hellscape, we are getting to a point where comparisons do not seem far-fetched. And that should worry everyone a lot more than is currently the case.
There’s also the related problem of poor economic policymaking and what it means for social stability. Over 10m young Africans enter the work force each year, yet the region’s economies only make 3m jobs per year. The episodes of unrest witnessed last year (most notably in Kenya and Nigeria) will likely recur this year. Again, it’s a mystery to me why African elites keep operating as if the problem of youth unemployment will magically resolve itself.
IV: Important elections in Cote d’Ivoire and Tanzania will determine the pace of their continued economic development.
(14) In my view, the most important elections on the Continent this year will be held in Côte d’Ivoire and Tanzania.
It is now almost certain that, despite his age, Alassane Ouattara (83) will seek a third term in Cote d’Ivoire. This is a bad idea. Ouattara deserves some credit for shepherding the post-2011 recovery. But Ivorian stability must be founded on working systems. That means the head of state must be replaceable. Ouattara’s run will complicated by the fact that Laurent Gbagbo is also running in a repeat of the disastrous 2011 election. Former Credit Suisse boss Tidjane Thiam will also be running, although he will be seeking to win mostly Ouattara voters. If his recent approval numbers are anything to go by (74% in 2024), Ouattara has a good chance of winning re-election and further stunting the institutionalization of Ivorian politics. However, the same poll indicates that a majority of Ivorians (58%) are not affiliated with any political party. The leading parties are affiliated with top three contenders — Ouattara’s RHDP (24%), Thiam’s PDCI (8.7%), and Gbagbo’s PPA-CI (5.5%).
In Tanzania, President Samia Suluhu Hassan looks set to win re-election in October. As evidence of perceived legitimacy of the political system, party affiliation in Tanzania (over 60%) is higher than in most African countries. According to the most recent Afrobarometer Survey (2024), she enjoys an enviable 79% approval rating (76% in urban areas) at a time when incumbents globally are in the red. Plus the ruling party won 98% of seats in the local elections late last year (even accounting for the usual hegemonic party padding, this was a show of force by the president). Therefore, all doubts about whether the ruling party would nominate her are now settled. While she doesn’t have the same level of control over the party like her predecessors, President Suluhu Hassan aggressively cleared the deck of credible alternatives without eliciting public backlash or significant defections. It also doesn’t hurt that the opposition is weak and far from united (in part because of her administrations heavy-handed tactics). It is worth noting that CCM routinely deploys authoritarian tactics in dealing with the opposition, including occasional cases of abductions and killings.
The biggest political risk moving forward is that the party, and in particular the presidency, will become even more insular to a point of eroding CCM’s legitimacy through overreach. The nakedly authoritarian handling of the Ngorongoro land dispute is a case in point. It is also open to question how tight a ship President Suluhu Hassan will be able to run in her second and final term as the open succession race heats up within CCM.
(15) Finally, 2025 will force questions over successions in Cameroon, Congo-Brazzaville, Equatorial Guinea, and Uganda. All four countries’ aging leaders have been in power for decades, and are known to harbor dreams of dynastic succession. Among them, Paul Biya (91), is the only one who will be facing voters this October in a bid to extend his 43-year rule.
Happy New Year!
