As the only one of the three Africa largest economies (the others are Nigeria and South Africa) where GDP growth expanded strongly even at the peak of the pandemic downturn (3.3%), Egypt has become the symbol of growth resilience for the continent, according to the African Export-Import Bank (Afreximbank).
Afreximbank’s report “Africa’s 2022 Growth Prospects: Poise under Post-Pandemic and Heightening Geopolitical Pressures” highlighted that Egypt is projected to account for 17% of Africa’s combined output expansion in 2022, up from 16% in 2021. The two largest economies, Nigeria and South Africa, are expected to account for 17% and 15%, respectively of aggregate output of the region.
“Growth is projected to strengthen in North Africa — the fastest-growing sub-region — lifted by the impressive performance of Egypt, the territory’s largest economy,” the report read. “The projected recovery is also indicative of the relatively strong bounce-back in a few large African economies, with Egypt — which entered the COVID-19 crisis with sizable buffers following years of economic reforms — being one case in point.”
For the third consecutive year, Egypt is a major growth driver for the region, with forecast GDP expansion of 5.9% in 2022, according to the latest forecast by the IMF. In addition to reform dividends, which eliminated currency overvaluation and strengthened the business climate to boost competitiveness, the national economy is being well supported by a variety of forces: expanding infrastructure development; a buoyant gas extraction sector; stronger private consumption; and growing remittances and capital inflows, the report explained.
Furthermore, the Afreximbank said, “While the three largest economies in the region (Egypt, Nigeria and South Africa) received nearly one third of Africa’s allocation, its economic impact has been most significant among low-income countries, which collectively received $13bn. For most of these countries the allocation has been substantial relative to the size of their economies, accounting for more than 5% of GDP for many (Burundi, Central African Republic, Libya, Sierra Leone and Zambia) and over 10% for others (Liberia and South Sudan).”
Egypt, Africa’s largest recipient of remittances, recorded a 10.8% increase even at the height of the pandemic downturn in 2020. Egypt and Nigeria can be counted among the top 10 recipients of remittance inflows in the world, and together have accounted for around 55% on average of Africa’s total remittance inflows over the last three years. But the steady growth of remittances — which have overtaken both FDI and official development aid (ODA) as a source of international financial resources flowing to the continent — was just as important in other African nations, including the Gambia and South Sudan where they increased by over 51% and 71%, respectively.
To support the AfCFTA’s implementation and capitalise on its growth potential, governments are developing critical economic infrastructure. This includes the expansion of special economic zones (SEZs) — which have been instrumental in other parts of the world, most notably Asia — in developing regional value chains and boosting countries’ participation in global value chains, the report elaborated.