Ghana is among six other African economies that withstood the economic impact of COVID-19 so successfully last year that it was acclaimed among the 10-fastest-growing economies in 2020.
The rest are Ethiopia, Uganda, Ivory Coast, Rwanda and Kenya and according to forecasts by economists compiled by Bloomberg during the last quarter of 2020, at least five of them are expected to remain in that elite growth club through 2022.
In a Bloomberg Opinion piece written by Matthew A. Winkler in November, 25, 2020, he posited that when all is said and done in 2020, African economies probably outperformed the rest of the world during the coronavirus pandemic.
“The transition to technology-driven, 21st-century business in a region where people are younger than anywhere else is reflected in the changing landscape of the 1,300 publicly traded companies that make up corporate Africa.
Communications firms have become a robust presence, making up 29% of the total market capitalization of the continent in 2020 compared to 13% a decade earlier, according to data compiled by Bloomberg. Materials and energy, the region’s benchmarks since colonial times, declined to 23% from34% during the same period”.
Mr. Winkler noted that Africa held off the COVID-19 assault better than many developing regions.
“Shares of sub-Saharan Africa’s 200 largest public companies have appreciated 13% this year as the comparable emerging-market index gained 12% and the riskier frontier-market benchmark lost 3%, according to data compiled by Bloomberg.
Corporate Africa advanced 78% during the past two years as the emerging market advanced 33% and the frontier market gained 12%. The same 200 African firms appreciated 324% over five years as the emerging market rallied 67% and the frontier market rose 27%.
Africa’s commodity-related companies led all industries with a 188% two-year total return (income plus appreciation) that dwarfed the 37% of global peers, and its nascent technology sector returned 123% when the comparable global benchmark climbed 92%”.
Hence, since the information put out by Bloomberg News’ Editor-in-Chief Emeritus, Matthew Winkler, the B&FT sought clarity on a few issues and further questions to Matthew which are pleased to publish. Matthew was asked what specific sectors African countries should continue to invest in to sustain the outperformance in growth?
He answered by saying the communications and health sectors since that will drive exceptional business and economic growth across the continent simply because they provide so many solutions to challenges related logistics, diseases, nutrition, and consumer discretionary preferences in the 21st century economy.
Consequently, he believes investment returns from these two industries will also outperform the broader market.
Secondly, African countries’ steady evolution from natural resources exporters into hubs of wireless, remotely engaged commerce has helped them weather the impact of the pandemic better. How has this transition into digital-based economy supporting Africa’s economic growth?
Matthew noted that wireless and remotely-engaged businesses account for 28% of the market capitalization of corporate Africa as reflected in its publicly companies.
He added that just five years ago, these companies represented less than one percent of corporate Africa demonstrating the accelerating growth of the digital-based economy. Lastly, the B&FT wanted to know whether this outperformance trend will continue after the pandemic and why?
Mr. Winkler observed that Africa remains the youngest continent from a demographic point of view which makes it increasingly attractive for business and industry seeking the highest returns. “The advent of flexible, mobile communications and delivery systems pave the way for myriad industries to favour Africa in their pursuit for growth”, he concluded.