Angola to Surpass Kenya’s Economy in IMF 2024 Forecast

The IMF forecasts Angola’s economy to surpass Kenya’s in 2024, signaling a shift in Africa’s economic landscape. Discover the factors driving Angola’s rapid growth.

 By Charles Wachira

In a surprising shift in Africa’s economic landscape, Angola is expected to overtake Kenya as the third-largest economy in Sub-Saharan Africa, according to the latest forecast from the International Monetary Fund (IMF), released on october 23.The IMF projects Angola’s economy to reach $122 billion in 2024, edging past Kenya, which is forecasted to maintain a GDP of around $119 billion. This marks a significant turnaround for Angola, a country whose economy has long been dependent on oil exports but has recently diversified into other sectors.

Angola’s Economic Surge: Oil and Beyond

Angola’s rise is being driven by a combination of factors, most notably the recovery of its oil sector and major efforts to diversify its economy. The country’s oil production rebounded sharply in 2023 after a period of decline, with higher global oil prices boosting revenues. However, the Angolan government has also focused on reducing its dependency on oil, investing heavily in agriculture, mining, and manufacturing to create a more balanced and resilient economy.

“The oil industry has always been central to Angola’s economy, but we realized the need for diversification,” said Angola’s Minister of Finance, Vera Daves. “In the past five years, we’ve made deliberate efforts to invest in infrastructure, education, and agriculture. We believe this has laid a strong foundation for sustainable growth.”

Kenya’s Slower Growth Amidst Economic Reforms

Meanwhile, Kenya’s economic growth has slowed in recent years due to a mix of domestic and external challenges. Rising public debt, coupled with high inflation and a weakening Kenyan shilling, have tempered the country’s ability to maintain its previously robust growth. Additionally, the country has faced disruptions in key sectors such as agriculture, which has been affected by erratic weather patterns and global supply chain issues.

Kenya’s Treasury Secretary, John Mbadi, acknowledged the challenges in a recent address to parliament: “While Kenya remains a strong economic hub in East Africa, we are dealing with a series of structural reforms aimed at addressing our debt levels and creating a more conducive environment for private investment. These reforms take time, but they are necessary for long-term stability.”

Despite this, Kenya’s service sector, particularly in telecommunications and financial services, continues to thrive. Safaricom, the country’s largest telecom company, has expanded its operations into Ethiopia, and the banking sector remains resilient. However, these gains have not been enough to offset challenges in other sectors like manufacturing and agriculture.

A Shift in Regional Economic Power

Angola’s projected overtaking of Kenya underscores a broader shift in Africa’s economic dynamics. Traditionally, Kenya has been seen as a leading economic power in East Africa, boasting a diverse economy with a strong service sector, robust financial institutions, and a burgeoning technology scene. However, Angola’s rapid recovery and diversification efforts reflect how resource-rich countries can quickly catch up when they invest in non-oil sectors.

Economic analysts note that this development is a sign of the growing competitiveness across the African continent. “Angola’s rise shows how African economies are becoming more dynamic and adaptable,” said David Ndung’u, an economist at the University of Nairobi. “Countries that were once heavily dependent on one sector are realizing the benefits of diversification and are seeing faster economic growth as a result.”

What This Means for Africa’s Economic Landscape

The shift could alter the balance of regional influence, especially in East and Southern Africa. While Kenya remains a key player in the East African Community (EAC), Angola’s growing economic clout will likely enhance its role within the Southern African Development Community (SADC). Furthermore, with both countries being part of the African Continental Free Trade Area (AfCFTA), this change could impact trade relations across the continent.

Kenya’s position as a gateway for international investors into East Africa may be slightly diminished, though analysts suggest that Nairobi will still maintain its status as a business hub. However, as Angola continues to grow, it may attract more foreign investment, particularly in sectors like mining, infrastructure, and energy.

Looking Forward: The Road Ahead

Despite the challenges, both Angola and Kenya are poised for future growth, albeit on different trajectories. Angola’s emphasis on diversification and Kenya’s focus on reforms will shape their economic paths in the coming years.

Vera Daves remains optimistic about Angola’s future: “This is just the beginning. We believe that with continued investment in non-oil sectors, Angola can sustain this growth and become a major player on the global stage.”

John Mbadi, on the other hand, is focused on ensuring Kenya remains competitive. “We are taking the necessary steps to stabilize our economy and restore investor confidence. Kenya’s potential is undeniable, and we are confident that our economy will rebound stronger.”

As Angola prepares to take the lead over Kenya in the IMF’s forecast, the race for economic dominance in Sub-Saharan Africa is far from over. Both countries will continue to play significant roles in shaping the continent’s economic future, but for now, Angola has the upper hand in this high-stakes competition.

Conclusion

The IMF’s latest projections for 2024 mark a notable moment for both Angola and Kenya. While Angola is poised for a remarkable recovery, Kenya remains focused on overcoming its economic hurdles. This new ranking is a reminder that Africa’s economic landscape is evolving, with resource-rich countries like Angola embracing diversification and rising to the forefront. Whether Kenya can regain its position as a regional powerhouse will depend on its ability to navigate its current challenges and leverage its strengths in key sectors.

As the continent’s economies grow and adapt, both Angola and Kenya will be key players in defining Africa’s future on the global economic stage.

Keywords:Angola economy growth: Kenya economic forecast: IMF 2024 report: African economic power: Angola surpasses Kenya