Nigeria, Egypt, and South Africa were responsible for 65 per cent of Africa’s Gross Domestic Product slowdown, McKinsey has disclosed.
The report, which was titled ‘Reimagining economic growth in Africa: Turning Diversity into Opportunity’, stated that Africa’s GDP by 2019 should have reached $3tn, not $2.6tn if the three countries had maintained their growth rate between 2000 and 2010.
It said, “Had Africa’s GDP continued to grow at the pace it achieved from 2000 to 2010, its GDP in 2019 would have been $3tn instead of $2.6tn. Fully 65 per cent of this difference can be explained by Africa’s ‘big three’ economies, with Egypt and Nigeria among the recent slowdowns and South Africa among the slow growers.”
According to the firm, Africa is home to the world’s youngest and fastest-growing population, yet its economic performance has lagged.
It noted that since 1990, the continent’s GDP per capita had only grown by one per cent annually, compared with India’s five per cent and China’s eight per cent.
It further stated that while 2000-2010 saw an acceleration in continental GDP, the growth retreated in 2010-2019.
Nigeria and 12 other African countries are home to 37 per cent of the continent’s population and accounted for 46 per cent of its GDP in 2019.
It explained that the slowing pace of these countries’ economic growth over the past decade affected the continent.
It said, “Between 2010 and 2019, growth in these countries did not keep pace with population growth—in the aggregate, 27 million more people in this cluster lived in poverty at the end of the period—and per capita consumption growth was stagnant at 0.8 per cent a year on average.”
McKinsey also noted that Nigeria’s economic decline had the largest impact on Africa’s slowdown with the country’s service sector responsible for 30 per cent of the continent’s slowing economic pace.
It said, “Its services sector alone was responsible for 30 per cent of the continent’s slowing economic pace, as its average annual growth rate fell from 11 per cent in the 2000–2010 decade to just three per cent from 2010 to 2019.
“This drop reflects the decline in trade—responsible for one-third of Nigeria’s services-related GDP—attributable to slower growth in consumer spending on goods (from 10 per cent from 2000 to 2010 to two per cent annually from 2010 to 2019). Growth in other services sectors such as real estate and information and communications technology (ICT) also decelerated significantly over the same period.”