Nigeria, South Africa and Ghana: Pre-COVID, COVID and Post-COVID


September 25, 2020

By FDC Ltd 

Nigeria, South Africa and Ghana are three of the largest economies in Sub Saharan Africa (SSA) with a collective economic size that is 49.37% of the region’s GDP. They are also the most affected by the coronavirus, accounting for 66.39% of total infections and 69.89% of total fatalities in the region. The countries, which have tried to stay afloat prior to the pandemic were all brought to their knees at the wake of the health crisis, although Ghana appeared to be in a better economic state than the other two (SA was already in a recession and Nigeria was growing abysmally low at 1.87% in Q1’2020).

In Nigeria, we expect stagflation to continue in the coming quarters, with inflation rate still at 13.22%, contracting growth rate of -6.1% (the deepest since 1983) and a high unemployment rate of 28%. The fiscal stimulus expected to cushion the impact of the pandemic will be an inadequate counterforce, given the budget constraints. Consumer price inflation is also expected to rise above 14% in 2020, from 11.4% post-covid. The high inflation in Nigeria is structurally as a result of the exchange rate restrictions on the import of several commodities coupled with supply constraints in the middle belt. This implies that further currency depreciation or adjustments would keep inflation elevated post-covid.

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Unlike Nigeria that started the year on the right foot, South Africa started with a recession. As if the recession in 2019 wasn’t bad enough, the pandemic deepened the recession. South Africa’s economy slumped into a second recession contracting more than projected in Q4 as power cuts weighed on output and business confidence. For the full year, expansion was 0.2%, which was lower than the central bank’s projection.

Based on an average rand-dollar exchange rate of 14.44 for the year, GDP was $352 billion. As a result of South Africa’s weak growth numbers, the central bank lowered the benchmark interest rate at its MPC meeting in March, before maintaining status quo. Inflation rate is expected to rise to 5% in 2020, from 4.1% in 2019 (a multi-year low), but price increase will remain modest. The reason for higher inflation in 2020 will be rand depreciation, higher electricity tariffs and possible tax increase.

In Ghana, the next presidential elections are due in December 2020 and there are growing tensions between the two main parties, the NDC and the NPP. More importantly, the advent of the crisis changed the nature of politicking for both parties.

In terms of the number of infections, Ghana is SSA’s third most affected nation (behind South Africa and Nigeria), which reflects the government’s policy of widespread testing. Due to the pandemic, we expect a contraction of 4.1% in GDP in the year.

In line with the sharp downturn in economic activities, we expect average inflation to remain elevated in 2020, averaging 11.2% (from 7.6% in 2019). This reflects a weaker currency (Ghc5.65/$), which we expect to continue as the fiscal deficit widens and investor uncertainty mounts ahead of the December election. Inflation will then moderate in 2021, to 8.4%, as disruptions to supply chains fade and domestic demand remains weak.


The projections indicate that recovery will be different for countries and this will be based on government policies earmarked to stimulate the economy. For instance, the IMF forecasts that Ghana’s economy will be the fastest growing of the 3 economies. While Nigeria and South Africa’s economy will contract by -5.4% and -8% respectively due to the pandemic, Ghana’s GDP is forecast to expand to 1.5%.

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