Fitch Projects Africa’s Economic Growth Despite AGOA Expiry

The expiration of the African Growth and Opportunity Act (AGOA) on September 30, 2025, poses significant challenges for Nigeria and other African nations, particularly apparel exporters. According to a report from BMI, a Fitch Solutions Company, the termination of AGOA’s duty-free access will compel several countries to revert to Most-Favoured Nation (MFN) tariff schedules, increasing their costs to access the United States market. This shift, combined with ongoing protectionist tariffs from the Trump administration, threatens to strain textile-dependent economies across the continent.

The report, titled “Sub-Saharan Africa Monthly Outlook: Regional Resilience Despite Global Uncertainties,” underscores the potential for sharper contractions in US-bound shipments for apparel-exporting nations if AGOA is not renewed or replaced with a more flexible framework. A one-year extension appears unlikely, meaning African exporters will face persistent near-term demand constraints until governments diversify their trade strategies or the African Continental Free Trade Area (AfCFTA) is fully implemented.

Positive Projections Amidst Challenges

Despite these structural hurdles, the broader macroeconomic outlook for the continent appears increasingly optimistic. In Nigeria, for instance, easing inflation is beginning to reshape economic expectations. After a tumultuous period characterized by soaring prices, currency reforms, and tight monetary conditions, Nigeria’s economy is projected to regain stability by the second half of 2025.

Real Gross Domestic Product (GDP) growth, which had declined due to inflationary pressures and reduced consumer demand, rose from 4.1 percent year-on-year in the second quarter to 4.2 percent in the third quarter. This improvement is attributed to stronger gains in the hydrocarbons sector and enhanced industrial output, particularly driven by the Dangote refinery. BMI forecasts that Nigeria will see even more decisive growth in 2026, as domestic trade and real estate sectors stabilize and consumer spending rebounds with improved purchasing power.

The improved economic performance is closely linked to Nigeria’s inflation trends. After peaking above 24 percent at the beginning of 2025, headline inflation decreased to 14.6 percent by September. BMI anticipates that disinflation will continue, with inflation projected to average 14.2 percent for 2026. This trend provides the Central Bank of Nigeria (CBN) with room to ease its monetary policy, potentially lowering interest rates to stimulate credit growth and boost household consumption.

Regional Growth and Opportunities

The anticipated rate cuts could serve as a significant catalyst for Nigeria’s growth in 2026. Lower borrowing costs are expected to benefit small businesses, enhance access to financing, and revive sectors like retail and services that have struggled due to expensive credit. Rising consumer confidence, along with a gradually stabilizing macroeconomic environment, positions Nigeria for a more balanced recovery compared to the volatility of previous years.

Nevertheless, the report warns of downside risks, including structural challenges related to power supply, foreign exchange liquidity, and security concerns, which may hinder recovery if necessary reforms are not implemented. Despite these risks, BMI maintains a positive outlook, asserting that Nigeria’s medium-term economic fundamentals will strengthen as inflation eases and investment conditions improve.

Other countries in the region are also poised for growth. Kenya is projected to experience slightly stronger growth in 2026, bolstered by improvements in agriculture and services. Ghana’s economic outlook is improving as inflation recedes and interest rates decline, thereby restoring confidence in financial markets. Tanzania is expected to maintain policy continuity, which should sustain investor interest over the medium term. South Africa, while still facing muted growth, is projected to benefit modestly from global commodity trends and gradual energy reforms.

Altogether, Africa’s economic landscape for 2026 suggests a more promising horizon. The combination of faster regional growth, easing monetary conditions, stabilizing inflation, and renewed investor interest indicates a potential shift from the turbulence experienced in recent years. If reforms deepen and global conditions remain favorable, the region may be entering a multi-year recovery cycle, led by agile medium-sized markets and supported by improving fundamentals in Nigeria, Africa’s largest economy.

BMI’s latest projections indicate that real GDP growth across Sub-Saharan Africa, excluding Sudan, will increase from 3.4 percent in 2024 to 3.9 percent in 2025, and further to 4.2 percent in 2026. This marks the fastest acceleration the region has seen in over a decade, reinforcing expectations that Africa will continue to be one of the world’s most promising growth frontiers. Medium-sized economies such as Botswana, Zambia, and Mozambique are anticipated to anchor this rebound, driven by renewed investment inflows and improvements in mining output.

The outlook for larger markets, including South Africa, Nigeria, Kenya, and Ghana, remains cautiously optimistic, although varying domestic challenges will influence the scale and pace of recovery in each country.