Some of Africa’s biggest economies opened 2026 on a cautiously positive footing, with January data pointing to easing inflation, stabilising currencies, and modestly improving growth prospects across key markets including Ghana, Zambia and Zimbabwe.
Reform momentum and tighter macroeconomic management are beginning to restore investor confidence in the continent—yet structural constraints and uneven regional recoveries continue to temper the continent’s broader outlook.
According to the World Bank’s latest Global Economic Prospects report, growth in sub-Saharan Africa accelerated to an estimated 4.0 percent in 2025, up from 3.7 percent in 2024, and is projected to reach 4.3 percent in 2026 and 4.7 percent in 2027, supported by stronger investment and export activity.
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“The pickup, however, is predicated on the external environment not deteriorating further and on substantial improvements in security in several countries in fragile and conflict-affected situations,” the report said. “Yet, this projected growth remains below the region’s long-term average and is insufficient to make substantial progress in reducing extreme poverty.”
Together, January’s currency movements, equity rallies, inflation trends, and policy signals suggest the continent is entering a macro-stabilisation phase—not yet a full recovery, but a meaningful shift away from the volatility that defined the past two years.
Currency stability anchors early-year confidence
Tunisia retained its position as Africa’s strongest currency, trading at 2.86 dinars per dollar at the end of January, strengthening from 2.90 in 2025, according to Forbes’ currency calculator.
The performance reflects strict monetary controls, managed imports, and cooling inflation, which eased to 4.8 percent last month—its lowest level since March 2021. A stronger currency reduces imported inflation, supports purchasing power, and lowers exchange-rate risk for investors, improving the outlook for long-term capital inflows even if fiscal pressures persist.
Libya’s dinar ranked second at 6.31 per dollar, followed by Morocco’s dirham at 9.01.
Ghana’s cedi also remained firm after emerging as one of Africa’s best-performing currencies in 2025. The Bank of Ghana injected up to $1 billion into the foreign-exchange market to smooth volatility following a sharp appreciation. By January, the currency traded near 10.84 per dollar, marking its first annual appreciation in three decades.
At the other extreme, São Tomé & Príncipe’s dobra remained the continent’s weakest currency at 22,282 per dollar, reflecting structural import dependence, weak export earnings, and fragile macroeconomic buffers. Sierra Leone’s leone (20,970) and Guinea’s franc (8,700) followed, alongside Madagascar’s ariary and Uganda’s shilling.
Nigeria exited the bottom-ten weakest-currency rankings in late 2025—its first improvement after nearly two years of sharp devaluations—supported by stronger reserves, policy reforms, and improved FX liquidity. The naira ranked 11th weakest at roughly N1,401 per dollar in January.
Looking ahead, analysts broadly expect a softer US dollar in 2026 as Federal Reserve rate cuts approach, though intermittent rebounds remain possible if inflation proves persistent or global risk sentiment weakens.
“Markets continue to price in Federal Reserve rate cuts during 2026, while improving conditions outside the US have reduced demand for the dollar,” Cambridge Currencies noted.
Zimbabwe and Egypt lead equity momentum
African equity markets began this year with strong positive momentum, extending 2025 gains across banking, consumer goods, and mining stocks as reforms, currency stabilisation, and improving sentiment reduced the long-standing “Africa discount.”
Zimbabwe led the rally, with the ZSE All-Share Index rising by 28 percent in dollar terms to 351.43 as of February 4. Gains reflect currency stabilisation under the ZiG framework, falling inflation, renewed foreign participation, and a 34 percent surge on the Victoria Falls Stock Exchange, where market capitalisation has climbed to about $1.7 billion.
Egypt followed, with the EGX 30 advancing 20.48 percent after a 26.81 percent gain in 2025. By early February, the benchmark index exceeded 49,600 points, while total market capitalisation reached EGP 3.257 trillion ($66 billion), supported by foreign inflows, easing inflation, FX stability, and a 73 percent surge in private investment.
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“Positive macroeconomic indicators, particularly those related to investment, were positively reflected in the performance of the Egyptian Stock Exchange in 2025 and are expected to continue to positively impact the capital market in 2026,” Ahmed Kouchouk, the country’s finance minister said, adding that Egypt plans to issue $2 billion in international bonds in the second half of the fiscal year.
Zambia’s LuSE All-Share Index gained 14.52 percent, buoyed by copper prices above $13,000 per ton, improved energy supply, and agricultural recovery. The International Monetary Fund projects 6.4 percent growth in 2026, up from 5.8 percent in 2025.
Nigeria followed with a 13.76 percent gain after the NGX All-Share Index hit a record 165,370 points and market capitalisation surpassed N100 trillion (about $71 billion). Analysts at Arthur Stevens Asset Management project potential 45.9 percent full-year returns, driven by earnings growth, FX stability, and reform momentum.
Namibia posted an 11.79 percent rise.
Weak activity clouds Ghana’s disinflation success
Despite record low inflation, Africa’s biggest gold producer recorded the weakest private sector activity among eight major African economies in January, with its Purchasing Managers’ Index (PMI) falling to 48.5 from 51.1, signalling renewed contraction.
“Companies in Ghana experienced a slow start to the year, as signalled by renewed falls in both new orders and business activity in January,” the survey noted. “On a more positive note, confidence for the coming year improved to a six-month high, and employment continued to rise.”
Uganda posted the strongest PMI at 52.6, while South Africa returned to expansion at 50.0. Egypt slipped into contraction (49.8), Nigeria weakened to 49.7, Kenya slowed to 51.6, Mozambique held at 50.9, and Zambia eased to 50.2.
The divergence highlights a key continental tension: inflation is falling faster than real economic activity is recovering.
Disinflation spreads across Southern Africa
Zambia and Zimbabwe joined Ghana and Ethiopia in returning to single-digit inflation, marking a significant regional turning point driven by tighter policy, currency stabilisation, and multilateral-backed reforms.
Zimbabwe’s inflation dropped to 4.1 percent in January—its first single-digit reading since 1997.
“This marks a historic moment for Zimbabwe,” Mthuli Ncube, the country’s finance minister said. “It comes nearly three decades after the country last recorded single-digit inflation in its domestic currency.”
Zambia’s inflation eased to 9.4 percent, supported by a stronger kwacha and copper-driven export earnings, while Ghana’s slowed to 3.8 percent, its lowest level since 1999.
The World Bank expects the number of African economies with single-digit inflation to rise from 27 in 2022 to 37 by 2025, underscoring a continent-wide disinflation cycle.
Rate cuts signal a shift toward growth
Monetary policy across Africa is beginning to pivot
Ghana delivered a larger-than-expected 250 basis point rate cut to 15.5 percent, while Angola reduced its benchmark to 17.5 percent and Mozambique lowered borrowing costs to 9.25 percent, the lowest since 2015.
Tanzania and South Africa held rates steady—5.75 percent and 6.75 percent, respectively—balancing growth support with inflation control.
“The trend signals a new phase of monetary policy aimed at supporting growth now that earlier inflationary pressures—driven by food, fuel, and currency shocks—are receding,” Veri Group said.
Overall, last month suggests Africa is entering 2026 on a firmer macroeconomic footing, marked by disinflation, currency stability, equity-market strength, and the first meaningful shift toward monetary easing in years.
Yet the recovery remains fragile, uneven, and externally dependent—with growth still below long-term averages and insufficient to materially reduce poverty. In effect, the continent has moved beyond crisis, but has not yet reached take-off.
That tension—between stabilisation and transformation—will define Africa’s economic story in 2026.
