In its recently released Macroeconomic Performance and Outlook (MEO) for Africa, the African Development Bank Group highlights that the continent will account for eleven of the world’s 20 fastest-growing economies in 2024.
At the release of the African Development Bank’s Macroeconomic Performance and Outlook (MEO) for Africa, from left: Prof Jefferey Sachs, Ambassador Albert Muchanga, Dr Akinwumi Adesina, Marie-Laure Akin-Olugbade, and Prof Kevin Urama.
With regional variations and despite sluggish growth in the Southern Africa region, overall, real gross domestic product (GDP) growth is expected to average 3.8% and 4.2% in 2024 and 2025, respectively. This is higher than projected global averages of 2.9% and 3.2%, the report said. The continent is set to remain the second-fastest-growing region after Asia.
The top 11 African countries projected to experience strong economic performance as forecast are Niger (11.2%), Senegal (8.2%), Libya (7.9%), Rwanda (7.2%), Cote d’Ivoire (6.8%), Ethiopia (6.7%), Benin (6.4%), Djibouti (6.2%), Tanzania (6.1%), Togo (6%), and Uganda at 6%.
“Despite the challenging global and regional economic environment, 15 African countries have posted output expansions of more than 5%,” Bank Group President Dr Akinwumi Adesina said, calling for larger pools of financing and several policy interventions to further boost Africa’s growth.
Africa’s Macroeconomic Performance and Outlook is published biannually, in the first and third quarters of each year, and complements the African Economic Outlook (AEO), which focuses on key emerging policy issues relevant to the continent’s development.
The MEO report provides an up-to-date evidence-based assessment of the continent’s recent macroeconomic performance and short-to-medium-term outlook amid dynamic global economic developments.
The latest report calls for cautious optimism, given the challenges posed by global and regional risks. These risks include rising geopolitical tensions, increased regional conflicts, and political instability – all of which could disrupt trade and investment flows, and perpetuate inflationary pressures.
Bank President Adesina emphasised that fiscal deficits have improved, as faster-than-expected recovery from the pandemic helped shore up revenue.
He explained further: “This has led to a stabilisation of the average fiscal deficit at 4.9% in 2023, like 2022, but significantly lower than the 6.9% average fiscal deficit of 2020. The stabilisation is also due to fiscal consolidation measures implemented, especially in countries with elevated risks of debt distress.”
He cautioned that with the global economy mired in uncertainty, the fiscal positions of the African continent will continue to be vulnerable to global shocks.
The report shows that the medium-term growth outlook for the continent’s five regions is slowly improving, a pointer to the continued resilience of Africa’s economies.
Presenting the key findings of the report, the African Development Bank’s Chief Economist and Vice President, Prof Kevin Urama said: “Growth in Africa’s top-performing economies has benefitted from a range of factors, including declining commodity dependence through economic diversification, increasing strategic investment in key growth sectors, and rising consumption, both public and private, as well as positive developments in key export markets.”
He added: “Africa’s economic growth is projected to regain moderate strength as long as the global economy remains resilient, disinflation continues, investment in infrastructure projects remains buoyant, and progress is sustained on debt restructuring and fiscal consolidation.”
“The future of Africa rests on economic integration. Our small economies are not competitive in the global market. A healthy internal African trade market can ensure value-added and intra-African production of manufactured goods,” said African Union Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, Ambassador Albert Muchanga.
He said the MEO forecast, and recommendations will be made available to African heads of state and added that the report will be useful when the African Union makes its proposals to the G20. The African Union was admitted to this ‘informal’ gathering of many of the world’s largest economies last year.
In 2024, up to 41 countries across the continent will achieve an economic growth rate of 3.8%, and in 13 of them, growth will be more than 1 percentage point higher than in 2023.
Director of the Centre for Sustainable Development at Columbia University, Prof Jeffrey Sachs noted that long-term affordable financing must be part of Africa’s strategy to achieve growth of 7% or more per year and warned that Africa is paying a very high-risk premium for debt financing. He called for this point to be made to the G20.
“Long-term development cannot be based on short-term loans. Loans to Africa should be at least 25 years or longer. Short-term borrowing is dangerous for long-term development. Africa must act as one, in scale,” he said
Sachs, who is also the UN Secretary-General António Guterres’ Advocate for Sustainable Development Goals, further called for a much larger African Development Bank, better resourced to meet Africa’s financing needs.
Regional overview
Notably, in the economic outlook by region, Southern Africa is expected to see continuing sluggish growth – at 2.2 and 2.6% in 2024 and 2025, respectively. This reflects continued economic weakness in South Africa, the region’s largest economy.
In contrast, East Africa is forecast to continue leading Africa’s growth momentum, with growth projected to rise to 5.1% in 2024 and 5.7% in 2025, supported by strong strategic investments to improve internal connectivity and deepen intra-regional trade.
In North Africa, successive adverse weather conditions and macroeconomic challenges will hold the region’s growth steady at 3.9% in 2024 with a slight improvement to 4.1% expected in 2025.
In Central Africa, growth is forecast to moderate to 3.5% in 2024 but projected recovery in private consumption and increases in mining investment and exports could help push growth to 4.1% in 2025.
And in West Africa, growth is projected to pick up to 4 and 4.4% in 2024 and 2025 respectively. Strong growth in most countries in the region is expected to offset slowdowns in Nigeria and Ghana. The announced withdrawal of Burkina Faso, Mali, and Niger from the Economic Community of West African States (ECOWAS) casts a shadow over the sustainability of gains amid growing uncertainty.
Driving faster and more sustainable economic growth
The 2024 MEO indicates that, in the short term, tackling persistent inflation will need a mix of restraining monetary policy coupled with fiscal consolidation and stable exchange rates.
The report identifies structural reforms and strategic industrial policies as key to accelerating economic diversification and strengthening the export sector.
It recommends that countries invest more in human capital and pursue a resource-based industrialisation and diversification strategy that allows the continent to exploit its comparative advantages and build resilience to shocks.
For more information visit: www.afdb.org