Ghana, Nigeria to witness slowest Economic growth in West Africa- AfDB

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Ghana and Nigeria’s economies are expected to grow at a slower rate in 2024 than their West African counterparts.

The West African area is predicted to increase by 0.8% to 4.0% this year and 4.4% in 2025, according to the AfDB’s 2024 macroeconomic performance forecast.

The African Development Bank indicated that, except from Nigeria and Ghana, every other country in the sub-region is expected to develop by at least 4% in 2024, with troubled Niger leading the field at 11.2%, followed by Senegal and Ivory Coast at 8.2% and 6.8%, respectively.

It said that “except for Nigeria and Ghana, all countries in the region are projected to grow at least 4 percent in 2024”
Nigeria’s Economic Forecast for 2024
The bank forecasts 2.9% growth in Nigeria in 2024, rising to 3.7% by 2025. This modest development trajectory is essentially the result of recent policy measures, such as the abolition of fuel subsidies and efforts to consolidate foreign exchange markets.

These policies, while intended to stabilise the economy, have temporarily increased the cost of living, reducing consumer spending and investment.

Despite these challenges, the report suggests that strategically redirecting resources—specifically, the $5 billion previously allocated to fuel subsidies between 2022 and May 2023—towards critical social infrastructure has the potential to yield significant long-term benefits over the immediate discomforts.

Ghana’s Economic Projection for 2024
In contrast, Ghana’s economic growth is anticipated to accelerate to 2.8% in 2024, up from a sluggish 1.5% in 2023. The analysis relates this slow pace to persistent inflationary pressures that continue to squeeze household budgets, meaning that inflation remains a significant impediment to Ghana’s economic resurgence and growth prospects.

Ghana and Nigeria: pseudo-rivals with similar economic stories.
Ghana experienced an extraordinary economic collapse in 2023, with an inflation rate that reached at more than 50%. However, current data imply a dramatic reduction in inflation to 23.4%. The Ghanaian currency, the Cedi, underwent a sharp devaluation of more than 11% in the first half of 2023.

The country’s economic troubles began in December 2022, when it declared a halt of payments on a significant portion of its $28.4 billion external debt, effectively defaulting.

However, Ghana negotiated a $3 billion contract with the International Monetary Fund (IMF), providing a ray of optimism among its financial upheaval.

Nigeria’s economic problems, like those of West Africa, began with the currency redesign fiasco, which was followed by the twin reforms of then-newly elected President Tinubu–the abolition of fuel subsidies and the unified foreign exchange market.

These policies boosted inflation to a 27-year high of 28.92% in December 2023, driven primarily by rising food and transportation costs. Furthermore, Nigerians have seen their currency decline by more than 100% since the unification of the FX market in June and the subsequent devaluation by the CBN.