Venture capital (VC) and private equity leaders are expecting a sub-Saharan African economic boom with GDP growth beating International Monetary Fund forecasts this year and next year, new research for blockchain-based mobile network operator World Mobile shows.
The IMF is predicting sub-Saharan Africa’s economy will expand by 3.7% this year and 4% next year and warns that the impact of Russia’s invasion of Ukraine and the global shock to oil and food prices is affecting the region, which is recovering from the after-effects of the Covid-19 pandemic and US interest rate rises.
However, the senior VC and private equity executives questioned across the UK, US, the Middle East, Singapore, Hong Kong, France and Germany believe economic growth in the region will beat expectations, and they highlight efforts to improve internet connectivity as a potential reason.
Nearly three-quarters (74%) expect GDP growth in the region to be 4%-plus this year with one in five (21%) predicting 4.3% or higher. For 2023, 90% expect GDP growth to beat the IMF forecast of 4% with more than two out of five (43%) predicting 4.5% growth or higher.
The research highlights the importance to VC and private equity executives of improvements to internet connectivity in driving economic growth – around 57% say it is extremely important while 29% believe it is important. Around 12% say it is important along with other factors, while just 1% say it is not very important to economic development. But World Mobile warns innovation could be held back if businesses do not recognise the importance of internet connectivity.
