Morocco

Situated on the western tip of North Africa, Morocco is classified as a lower-middle-income country by the World Bank with GDP at current prices estimated at $112.55bn and per-capita GDP of $3392 in 2014.

On a purchasing power parity basis, GDP per capita stood at $7,198. It has made remarkable progress reducing poverty over the last decade by more than 40pc. Less than 9pc of its population qualifies as poor compared with 16.2pc a decade ago. Slowing population growth has also played an important role in poverty reduction.

The economy is relatively well diversified with higher value-added sectors, including automotive, electronics, chemicals and aeronautical industries. It is, however, vulnerable in two main areas. Firstly, most of its exports, foreign investments, tourism, and remittances inflows come from eurozone.

Secondly, private consumption depends heavily on the agricultural activity, since 40pc of jobs are in that sector. Since the weather tends to be erratic and irrigation is not yet well-developed, growth in the agricultural sector tends to remain volatile.

The services sector, which accounts for more than half of GDP, has recorded a robust growth in recent years. Tourism and financial services are well developed. And tourism is also an important source of foreign exchange earnings and jobs. The industrial sector accounting for 30pc of GDP is another key source of foreign exchange earnings, with phosphates and phosphate by-products, as well as manufactured goods, being important export products.

Relatively weak economic growth in 2014 reflected reduced agricultural output because of severe drought. Despite economic diversification, agriculture remains a significant sector, accounting for 15pc of GDP with 40pc of employment.

Morocco is expected to emerge as the fastest growing economy in North Africa, with its GDP rising nearly 5pc in 2015, as the new consensus government paves the way for bolder economic reforms. The World Bank forecasts a growth of 4.6pc in 2015.

Morocco sees continued progress toward fiscal consolidation and improvement in external indicators. For the third year in a row, the government expects to further reduce fiscal deficit in 2015 to 4.6pc of GDP and began stabilising the central government debt at around 66pc of GDP.

The draft Finance Bill 2016 seeks a reduction of the budget deficit to 3.5pc of GDP, in order to achieve the 3pc of GDP target by 2017. The fiscal deficit is narrowing owing to lower international oil prices, that has reduced the cost of subsidies, and as a result control on spending.

Improvements on the external front have been more significant. The country’s external current account deficit has reduced to 4.6pc of GDP in the first half of 2015 from 10pc in 2012. Foreign exchange reserves at around $20bn are sufficient to cover more than four months of imports.

Kenya

Kenya’s economy is market-based with a few state-owned infrastructure enterprises and a liberalised external trade system. The country has become Eastern and Central Africa’s hub for financial, communication and transportation services and emerging as one of Africa’s key growth centres with sound economic policies.

As of 2015 estimates, Kenya had a GDP of $70bn and per capita income estimated at $1,587. A recent report captioned ‘Rising Poverty in Africa’ reveals that the gap between the rich and the poor in the country is one of the highest in Africa. About 62pc of Kenya’s national wealth is controlled by less than 10,000 persons in a country whose population is over 40m people.

Kenya plays a central role in East Africa as the largest economy and a gateway into the region. Its financial sector is strong with deep and developed domestic debt markets. With a large, highly skilled and educated workforce that ranks among the best in Africa and strong growth prospects for commercial agriculture, agro-processing and other manufacturing, it offers potentially lucrative opportunities for investment in the services sector.

Kenya earns substantial foreign exchange from cash crops such as tea and horticulture.

It is a well-diversified, relatively developed economy. Buoyed by falling oil prices, its growth is projected to rise from 5.4pc in 2014 to 6-7pc over the next three years (2015-2017), making it one of the fastest-growing economies in Sub-Saharan Africa. External and internal balances are expected to improve significantly due to falling oil prices. In addition public investment in infrastructure, mainly in energy and standard gauge railways, will strengthen growth in the medium term.

But there remains dark clouds on the horizon including widening public sector deficits, growing debt levels and the continuing decline in commodity prices, particularly coffee which has seen a 25pc fall over the past year.

Owing to prevailing economic conditions globally and regionally, the government too has cut its 2015 economic growth from 6.5pc projected earlier down to 5.3pc. At the same time, the country has chronic budget deficits now at 8.7pc of GDP. This has raised concerns at the national level.

According to the World Bank, Kenya’s economic performance remains solid but it has trimmed growth forecast for this year and next as east Africa’s biggest economy is facing headwinds from currency volatility and tighter monetary policy. Kenya’s shilling has lost 14pc against the dollar this year.

But the country remains on course to be one of Africa’s fastest growing economies despite a slight slowdown in economic expansion. The World Bank projects 2015 growth at 5.4pc.

However, recent security concerns, negative travel advisories and fear of the spread of Ebola are impacting negatively on tourism business.

Published in Dawn, Business & Finance weekly, November 23rd, 2015