Africa Outlook – Insights from Duncan Bonnett, Africa House

In March 2025, the HSF Africa Group hosted Duncan Bonnett, a Director of Market Access and Research at Africa House. This session served to promote knowledge sharing and market intelligence within the HSF Africa Group. Bonnett's presentation encompassed growth drivers for key countries in Sub-Saharan Africa, trends across the continent's key sectors, potential threats and opportunities in the African market and a range of other discussion points.

This article summarises Bonnett's key insights on the African market in 2025.

Growth drivers for key African countries

Referring to the IMF's Global Economic Outlook (October 2024), the session discussed the growth drivers for key countries in Africa, reporting their GDP in 2024 and forecasting potential GDP growth in 2025 and 2029. Generally, these African jurisdictions can be divided into three categories according to their GDP growth drivers: stagnating, on the rise and performing well.

Nigeria and South Africa are stagnating with regard to GDP growth. Nigeria has experienced setbacks due to high inflation and oil sector issues but remains a key regional player with substantial infrastructure investments. South Africa is experiencing sluggish growth due mainly to policy issues, although there are other reasons for its stagnating growth. Key focus sectors for South Africa include renewables, green hydrogen, automotive, and infrastructure.

Five countries were earmarked as being on the rise. Ethiopia's GDP is expected to bounce back strongly, although a rebound is contingent on stability in domestic and regional politics. Ethiopia's key sectors include manufacturing and infrastructure. Angola's GDP is turning the corner with policy liberalisation and infrastructure investment; its key sectors include oil and gas, infrastructure, and energy projects. The East African countries of Tanzania and Uganda are emerging as significant players in the region with substantial investments in mining and infrastructure. Finally, Namibia hosts the potential to become an energy hub given its substantial investments in green hydrogen, mining, and infrastructure.

Four countries were regarded as performing well. Kenya remains the largest economy in East Africa, serving as a hub for manufacturing, services, and trade. Its key sectors include agriculture, services, and manufacturing. Cote d'Ivoire has re-emerged as a hub for francophone West Africa in part due to the strong presence of development finance institutions that are headquartered in the country (e.g., Africa Development Bank). Its key sectors include energy, construction, mining, and agribusiness. Senegal has experienced strong growth driven by its oil fields beginning production and infrastructure development. Mozambique has attracted significant investments in oil and gas despite some projects being postponed at present. 

Key sector trends

The session then covered key African market trends to consider across four sectors in 2025.

The Energy sector remains the key driver of change in Africa. There is a growing emphasis on off-grids and mini-grids as a post-modern solution to the traditional large, centralised (and expensive) method of power generation. Significant investments in renewable energy (e.g., solar, wind & geothermal) have been driven by global regulations and the demand for reduced carbon footprints.

In the Mining and Critical Minerals sectors, the demand for technology related to electronics, AI and military products has led to a sustained drive to unlock critical minerals. Southern Africa accounts for 10-15% of the world's critical minerals. Key minerals include cobalt, nickel, lithium, graphite, manganese, rare earth elements and uranium. Amongst a multitude of global players, Middle Eastern states and entities are seeking to invest in the African minerals/mining space. EU countries may also turn to Africa to secure sources of minerals that were previously available from now-sanctioned Russia. Amidst these trends, significant investments in gold, bauxite, iron ore, and other critical minerals have enabled West Africa's mining sector to experience rapid development.

With regard to the Infrastructure and Logistics sector, significant investments are being made in upgrading and expanding ports, rail, and road connectivity across sub-Saharan Africa. There is an increasing trend toward the privatisation and concessioning of infrastructure projects, with challenges remaining for toll roads, water, and sanitation.

Finally, in the Agriculture sector, the lack of sufficient infrastructure to support agriculture continues to lead to significant crop losses – i.e., 30 to 50% of crops produced in Africa never make it to consumers. An improved focus on reducing import shocks and increasing local value addition of agricultural products in key African countries is anticipated in 2025 and onwards. Many African countries have sought to ban or restrict imports of processed foods in favour of local production. In furtherance of this, countries like Cote d'Ivoire, Ghana, and Nigeria are making large investments into the processing and manufacturing of crops like cocoa, cashews, and others. This is a shift away from previous practices whereby raw materials were exported to be processed and manufactured outside the continent in countries like Spain and Asia. 

Potential threats and opportunities

Amidst the various growth drivers and trends discussed, the following threats and opportunities to the African market were identified:

Threats

• Instability in North Africa and Sahel could spill over into other countries.
• Population growth poses challenges if not managed properly.
• Global conflicts, such as the Russia-Ukraine war, can exacerbate existing challenges in Africa such as energy and food security.
• Climate change poses significant risks, including extreme weather events, droughts, and floods.
• High levels of poverty and the rise of populist movements can lead to social unrest and political instability.
• High cost of borrowing and the strengthening of the US dollar are putting many African countries under financial stress.

Opportunities

• The youth are increasingly mobilising for change through the use of technology and social media, demanding better governance and accountability (e.g., as has been the case in Nigeria, Kenya and Angola).
• Advances in technology, such as drone-delivered medicines, mobile money transfer systems and smart agriculture are improving upon African healthcare, education and financial services.
• Investments in renewable energy can support Africa's transition to a sustainable energy future.
• The introduction of private operators in sectors such as ports, rail, and renewable energy can bring expertise and investment to improve infrastructure and support economic growth.

Further discussion points covered

The session also included discussions of specific topics that factor into the general trends observed and anticipated for sub-Saharan Africa.

Foreign direct investment ("FDI") into Africa surged to $94 billion last year for the whole of Africa, despite a global drop in foreign investments. This headline value did, however, involve a UAE entity's one-off investment of approximately $30 billion into building a new city in Egypt. Key sectors attracting FDI include renewables, green hydrogen, automotive, infrastructure, manufacturing, and telecoms.

Regarding current and future project activity, there have been approximately 5000 projects spanning various sectors in sub-Saharan Africa since 2020, worth a total value of $1.3 trillion. Key sectors for projects activities include port and rail, power, oil & gas and mining, as well as the broader built environment. 

Rapid urbanisation is expected to result in numerous cities in sub-Saharan Africa having populations exceeding 500,000 by 2030. As an example, Nigeria is expected to have more cities with populations over one million than the European Union by 2030. The population in African cities is expected to treble, reaching approximately 780 million by 2035. This population growth shall require proper planning, climate resilience and infrastructure investments to ensure sustainable urban development.

Global competition for investment in Africa constitutes a key consideration for players in the African markets. As the US reduces its involvement in Africa, other countries and regions are stepping in to fill the vacuum. Key players include China, Japan, South Korea, Middle Eastern countries (e.g., UAE and Saudi Arabia), Turkey and the European Union.

The final point related to Africa Continental Free Trade Area ("AfCFTA"). AfCFTA's overarching aims are to increase socioeconomic development, reduce poverty, and make Africa more competitive in the global economy. AfCFTA is gradually moving into gear with tariff phasedowns and initiatives to increase intra-Africa trade. Tariff phasedowns started in 2021. Countries beginning to implement these tariff phasedowns shall start at the phasedown rate for 2025 and not that for 2021. Various institutions, such as the African Union and African Development Bank, are engaging in activities to unblock issues related to intra-African trade. Some of them are physical – e.g., barriers to trade due to rail, road and borders. Others are not. Currently, African export monies are routed through New York-based banks, costing the continent approximately $5 billion per annum in lost revenues. Clearing house initiatives are being progressed such that African trade can be completed in local currencies rather than Dollars/Euros/Rubles.

In Conclusion 

Heading into 2025 and beyond, the African market demonstrates key potential for growth. Stagnation in major economies like Nigeria and South Africa is contrasted by the performance of nations like Cote d'Ivoire and Kenya, each acting as major regional hubs for investment. The energy, mining and critical minerals sectors continue to trend upwards. Infrastructure development could drive intra-Africa trade through heightened connectivity and support the agricultural sector against significant crop losses. Political instability, global conflicts and the high cost of borrowing threaten to foil African nations' growth potential. However, developments in technology, youth mobilisation and the privatisation of operators on infrastructure/energy projects represent opportunities that may address these threats. Altogether, as Africa's population grows and rapidly urbanises, global competition for investment in the continent is on the rise too.