Africa's `fast flowing river' of positive developments 2024

After years of economic decline following the Africa rising era, 2024 has ushered in a wave of positive developments across the continent. Major economies, such as South Africa, Egypt, and Nigeria, have implemented significant reforms, while Kenya has managed to slash its budget deficit from nearly 6 per cent to 3 per cent of GDP. Markets are beginning to respond favorably, with Senegal expected to achieve impressive growth rates of 8-10 per cent in 2024-25. Despite these promising indicators, challenges persist, particularly for populations grappling with devaluation and tax increases. In a recent interview on CNBC Africa, Charlie Robertson, Head of Macro Strategy at FIM Partners, shed light on the current economic landscape of Africa. Robertson emphasized the link between the strength of the dollar and investor sentiment towards emerging markets. Historically, periods of dollar strength have led to negative perceptions of emerging markets, but Robertson noted that such periods also present investment opportunities when the cycle eventually turns. One of the standout performers in Africa's economic revival is South Africa. Robertson pointed out that the country has been underperforming for years but is now poised for growth, with the government of national unity instilling optimism in both equity and bond markets. Robertson's analysis suggests that South Africa could achieve a growth rate higher than the IMF's initial forecast of 1 percent, possibly reaching 3 percent with the current reforms in place. Egypt and Nigeria have also made significant strides with currency reforms, attracting global investors who were previously deterred by FX challenges. Robertson highlighted the favorable exchange rates in both countries, making them attractive investment destinations. The transformation of these economies from struggling to investable has contributed to a notable shift in investor sentiment towards Africa. Besides the major economies, Robertson pointed to positive developments in other African countries. He singled out Kenya, where proactive measures such as rate hikes and securing an IMF deal have bolstered the economy and driven currency appreciation. Senegal's recent political stability and adherence to IMF programs have positioned it as a potential high-growth economy, with growth rates projected to reach 8-10 percent. While South Africa has seen positive movements in its bond and equity markets, other economies like Egypt and Nigeria offer attractive yields on dollar-denominated debt with IMF support. Despite undervalued equity valuations in these markets, Robertson believes that investor interest will shift from high-interest government bonds to equities as economic conditions continue to improve. Overall, the economic resurgence in Africa in 2024 reflects a turning point for the continent's financial landscape. With major economies leading the way in implementing reforms and attracting investments, Africa is poised for a period of sustained growth and development. As global investors begin to recognize the opportunities present in African markets, the continent's trajectory towards prosperity appears more promising than ever.