African economies out-performing other nations amid COVID-19 crisis

2020-11-26 21:50:56
African economies out-performing other nations amid COVID-19 crisis

African economies will probably out-perform the rest of the world during the coronavirus pandemic, as the virus surge threatens to reverse global economic rebounds.

Africa's 54 countries now include seven of the globe's 10 fastest-growing economies, in part because the lethal virus may have improved their competitive advantage as they accelerated their decade-long transformation from exporters of natural resources to hubs of wireless, remotely engaged commerce.

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 1300 publicly traded companies that make up corporate Africa.

Communications firms have become a robust presence, making up 29 percent of the total market capitalisation of the continent in 2020 compared to 13 percent a decade earlier, according to data compiled by Bloomberg.

Materials and energy, the region's benchmarks since colonial times, declined to 23 percent from 34 percent during the same period.

Africa has held off the COVID-19 assault better than many developing regions. By mid-November, the coronavirus had receded in some of the continent's largest countries – South Africa, Nigeria and Ethiopia – to their lowest levels since April or May, according to data compiled by Johns Hopkins University.

In contrast, Mexico earlier this month became the fourth country to exceed 100,000 confirmed COVID-19 deaths – behind the US, Brazil, and India – amid a recent global virus resurgence. South Africa, Africa's sixth-most populous country, suffered 21,201 deaths among its 775,502 COVID-19 cases.

The economies of Ethiopia, Uganda, Ivory Coast, Egypt, Ghana, Rwanda and Kenya withstood the economic impact of the pandemic so successfully that they were among the world’s 10 fastest-growing in 2020.

At least five of them are expected to remain in that elite growth club through 2022, according to forecasts by economists compiled by Bloomberg during the past three months. Two years ago, Africa included only three of the best performers and in 2015 it had four.

Shares of sub-Saharan Africa's 200 largest public companies have appreciated 13 percent this year as the comparable emerging-market index gained 12 percent and the more risky frontier-market benchmark lost 3 percent, according to data compiled by Bloomberg.

Corporate Africa gained 78 percent during the past two years as the emerging market advanced 33 per cent and the frontier market gained 12 percent. The same 200 African firms appreciated 324 percent over five years as the emerging market rallied 67 per cent and the frontier market rose 27 percent.

Nigeria has had the world's best-performing shares this year. Among the world's 93 major equity markets, the Nigerian Stock Exchange All Share Index of 153 companies was No. 1 with a 27 percent total return, according to data compiled by Bloomberg.

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