The West African Economic Outlook for 2023

Within the past two years, the global economy and its interconnected industries have been impacted by different socio-economic and political developments. As a result, industry stakeholders and investors have been keen to understand how to successfully navigate the impact of these developments on financial and operational goals moving forward, especially in 2023. 

For instance, investors are working to unpack the implications of global trends on the economic outlook for major West African countries such as Ghana and Nigeria. Until recently, these countries have been on a growth trajectory in sectors such as real estate, which has now been impacted by the aforementioned developments. In view of this, Seso Global, Africa’s most trusted property app, organized a webinar with a stellar panel of real estate experts to present a deep dive into the status quo and future of the real estate industries in West Africa. 

This webinar was a great opportunity to inform real estate investors and equip them with the tools to make the right investment decisions in 2023. Despite new challenges, major West African Countries like Ghana and Nigeria continue to have significant potential for investment and development.

The performance of the real estate sector is often a good reflection of the health and performance of the overall economy of a country. Phillip Jarman, Co-founder and COO of Seso Global, identified a number of major headwinds to look out for in 2023, and explained how they could translate into the West African real estate sector. 

War in Ukraine

In 2022, the war in Ukraine had devastating knock on effects in areas like supply chain management, the cost of energy and inflation. The combination of these headwinds created an environment of uncertainty in 2022 and made it difficult to make long term investments. 

Supply Chain Disruption: 

The war has also had a significant impact on global supply chains, causing disruptions, delays, and increased costs. Not least through creating an environment of uncertainty and risk. However in spite of this, savvy nations are identifying and developing alternative sources of energy and supply chains to mitigate the situation. 

Inflation: 

The high inflation levels of Ghana (27.18%) and Nigeria (18.91%) in 2022 are expected to decrease in 2023 to about 20.94% (Ghana) and 17.33% (Nigeria). Both Nigeria and Ghana had also seen significant depreciation of their respective currencies against the dollar in 2022. While the naira and cedi are not out of the woods in 2023, the hope is that consolidation of effective fiscal policy interventions (such as Ghana signing up to the IMF program) and improvements in balance of payments, security and supply chain management, will help mitigate the challenges in 2023.   

Nigerian Election

The Nigerian General election which is scheduled to take place on the 25th February 2023 will also have a resounding impact on Nigeria’s socio economic and political fortunes and by extension the health of its real estate industry in 2023. 

There are three major candidates for the 2023 Nigerian General Election: 

• Bola Ahmed Tinubu, from the All Progressives Congress, has a track record of driving Lagos’ economic growth during his tenure as governor from 1999 to 2007. As “the Godfather of Lagos,” he has a reputation for strong leadership and strategic planning. 
• Atiku Abubakar, running for the main opposition People’s Democratic Party, brings decades of experience as a former vice president, but has made several unsuccessful attempts at the presidency. 
• Peter Gregory Obi, running from the smaller Labour Party, is known for his technocratic approach to governance, with a focus on youth, education and human capital development. As a former governor of Anambra state, his experience with economic policies that promote growth at the state level could translate well at the national level. 

Ultimately, the candidate who can effectively implement policies that promote economic growth, reduce poverty and inequality, and foster social stability and cohesion will be the one who shapes the future of Nigeria’s socio-economic growth.  

Wilson Erumebo, a senior economist and researcher at SOAS, outlined three key trends to look out for in real estate economies of Nigeria and Ghana in the coming year: 

1. Diaspora remittances, currency depreciation and rapid urbanization. According to research data, diaspora remittance inflows into Nigeria reached above $20 billion, eclipsing total foreign investment ($6.7 billion) and total revenues ($13 billion). Diaspora remittance inflows are especially important for the real estate industries in West African countries, as a recent World Bank survey showed that 52% of a sample group said they sent money home to build or buy a house.

2. The depreciation of local West African currencies against the dollar and other western currencies have put the diaspora in a better position to invest and buy properties in Ghana and Nigeria. 

3. Finally Wilson Erumebo mentioned that rapid urbanization will continue to raise the demand for real estate in major West African cities like Accra, and Lagos. In spite of continuing challenges with debt accumulation, high inflation, low GDP growth and the cost of living crisis, the real estate markets can bounce back if there is a transition of a critical mass from low income earning status to middle income earning status. Additionally, a commitment from the government to support affordable housing will boost the growth of the larger real estate markets in Ghana and Nigeria. 

Seso Global highlighted the growth potential of real estate in Nigeria in 2022. There was a large growth of demand in new real estate hotspots like Ibeju-Lekki and Epe among others areas in the mainland. Daniel Bloch, Co-founder and CEO of Seso Global noted that there is the need to see more housing prices and opportunities that can fit with the budgets of most Nigerians and reflect the capacity of the middle class. Furthermore, there are a number of large scale developments being built in emerging areas in Lagos such as the Lagos Rail Mass Transit, the Dangote Refinery, the Lekki Free Trade Zone and the Lekki Deep Sea Port. By extension there are increased real estate developments and sales in these emerging areas that are more accessible. These properties and estates offer prices ranging between 15 and 20 million naira and often include flexible payment plans arranged by established locally based developers.

Click here to view an an analysis of what is driving growth in Lagos. 

Again, international developers are increasing their interest and investment in Nigeria and Ghana in view of the aforementioned signals of population growth, increased urbanization and demand for affordable housing. As more and more large scale investors come into these emerging markets, the increase in capital and developments will lower property prices and allow for more flexible payment plans that will ultimately expand opportunities for purchases and investment.  

Dansoa Siaw-Misa, VP of Operations & Sales at Seso Global, explained that the real estate scene in Ghana has run along similar lines. She suggested that there has been a shift in property demand dynamics from mainly Ghanaian residents living abroad (about 20% of purchases with Seso Global) to increased interest from the (non-Ghanaian) diaspora. Undoubtedly, the Year of Return and Beyond Return initiatives have had a significant positive impact on the real estate market in Ghana, by providing a channel for this surge in investment from the diaspora. Moreover, it has facilitated the building of cultural connections between Ghana and the diaspora, leading to a greater understanding and appreciation of Ghana that encourages diasporans to consider long term residency and investments in Ghana. Simply, more members of the diaspora (usually from the USA) are looking for opportunities not only as investors but are also looking to relocate to ghana. 

The cosmopolitan capital of Accra has traditionally seen the most demand for property but there are emerging areas that are seeing increased demand including Aburi, Prampram and Kasoa. Aburi has gained popularity because of the scenic lush environment while Kaosoa and Prampram are part of a stretch of prime coastal and beachfront locations that offer individuals unbeatable investment value. Furthermore, in the face of recent challenges such as the debt restrictions, cedi depreciation and fiscal challenges, more individuals (especially locals) are looking for opportunities in real assets (real estate). Thus individuals are buying more property as a safer and more resilient investment to hedge against the volatile economic trends. 

Overall, West Africa’s economic outlook for 2023 is positive, and both Ghana and Nigeria’s real estate industries have significant potential for growth and investment. While challenges such as limited access to financing, limited government investment and economic disruptions exist, investors who carefully consider the factors outlined above and take a long-term view of the market could reap significant rewards.

Click here to watch our recent webinar with a panel of experts, including:

• Phillip Jarman (Co-founder and COO Seso Global) 
• Wilson Erumebor (West African economist), 
• Daniel Bloch (Co-founder and CEO of Seso Global) 
• Dansoaa Siaw Misa (VP of Strategy & Sales)  
• Kunle Barry Osilaja (Chairman UPDC Hotels), 
• Seyi Oyinlola (Vice chairman at SAO Property Development and Investment LTD), 
• Kwadwo Boadi-Aboagye(Co-founder of Eleven Eleven Ghana).