By Guardian Reporter , The Guardian
WHILE African economies demonstrate resilience amidst global challenges, East Africa spearheads growth, the West gears up, and Southern Africa experiences
moderate expansion, a recent report calls for radical financial reforms and increased African representation in Multilateral Development Banks (MDBs).According to the latest African Development Bank Group’s African Economic Outlook 41 countries on the continent are projected to experience stronger growth rates in 2024 than they did in 2023.
The report unveiled at the Bank’s Annual Meetings on Thursday in Nairobi, described Africa’s growth potential as ‘remarkable’. The continent will retain its 2023 ranking as the second fastest-growing region after developing Asia in 2024 and 2025. The theme of the 2024 AEO, “Driving Africa’s Transformation: The Reform of the Global Financial Architecture,” aligns with the Bank’s Annual Meetings’ theme.
AfDB President Dr Akinwumi Adesina said while the Bank was proud of the growth projections of many African countries as reflected in the report, it was not blind to the challenges. “Africa’s future is bright, but need to make sure we tackle governance, transparency, accountability, and management of our natural capital. We need to make sure resources are used for the benefit of the people of this continent… The kind of resilience we are talking about cannot happen unless we deal with the issue of climate change.”
He added: “We must make sure we are investing in our young people—in their skills, talents, entrepreneurship, and giving them tools. That is why I am excited about what we are doing with the Youth Entrepreneurship Investment Banks.”
The report warns that Africa is off track to meet almost all of the Sustainable Development Goals by 2030.
It argues that unless corrective action is taken, including to reverse the steepening poverty curve, Africa will be home to almost 9 out of 10 (or 87 percent) of the world’s extreme poor by 2030.
According to the African Economic Outlook, the rebound in Africa’s average growth includes a rise to 3.7 percent in 2024 and 4.3 percent in 2025, exceeding the projected global average of 3.2 percent. Of this figure, 17 African economies are projected to grow by more than 5 percent in 2024. The number could rise to 24 in 2025, as the pace of growth accelerates.
This growth trajectory is expected to surpass pre-2023 levels, with East Africa leading as the fastest-growing region (up to 3.4 percentage points). Other regions are also projected to witness moderate to robust growth.
In a presentation, Chief Economist and Vice President of the African Development Bank, Prof Kevin Chika Urama, underscored why strategic policies and firm political commitment are key to the effective use of resource wealth for domestic revenue generation.
He also described hard infrastructure, including roads, railways, and bridges, and soft infrastructure, including knowledge and institutional governance capacity, as “two wings of an aircraft”.
“Investing in productive infrastructure is key to accelerating Africa’s structural transformation,” he said.
Growth prospects vary across Africa’s regions, reflecting differences in economic structure, commodity dependence, and policies.
East Africa, the continent’s fastest-growing region, will see real GDP growth rising from an estimated 1.5 percent in 2023 to 4.9 percent in 2024 and 5.7 percent in 2025. The downward revision of 0.2 percentage point for 2024 compared with the forecast in the January 2024 Africa’s Macroeconomic Performance and Outlook (MEO) is due to larger-than-expected contractions in Sudan and South Sudan following the ongoing conflict in the former.
Growth in Central Africa is forecast to moderate from 4.3 percent in 2023 to 4.1 percent in 2024 before improving strongly to 4.7 percent in 2025. The upgraded forecast is due to expectations of stronger growth in Chad and the Democratic Republic of Congo as a result of favourable metal prices.
Growth is projected to pick up in West Africa, rising from an estimated 3.6 percent in 2023 to 4.2 percent in 2024 and consolidating at 4.4 percent the following year. This is an upgrade of 0.3 percentage point for 2024 over the January MEO 2024 projections, reflecting stronger growth in the region’s large economies—Côte d’Ivoire, Ghana, Nigeria, and Senegal.
In North Africa, growth is projected to decline from an estimated 4.1 percent in 2023 to 3.6 percent in 2024 and 4.2 percent in 2025, with a downward revision of 0.3 percentage point for 2024 from the January 2024 MEO. Except for Libya and Mauritania, growth has been revised downward for all other countries in the region.
Growth in Southern Africa is projected to pick up slightly from an estimated 1.6 percent in 2023 to 2.2 percent in 2024 and firm up to 2.7 percent in 2025. The growth rates for 2024 and 2025 show an upgrade of 0.1 percentage point over the January 2024 projections, mainly reflecting a 0.7 percentage point increase in South Africa’s projected growth. Due to South Africa’s larger weight in the region, the upgraded growth forecast offset the combined effect of downward revisions in Angola, Botswana, Lesotho, Zambia, and Zimbabwe.
African Economic Outlook makes bold proposals to reform the global financial architecture
The African Economic Outlook 2024 calls for an overhaul of the global financial architecture to transform African economies. This includes giving Africa a greater voice in multilateral development banks and international financial institutions, reflecting its growing share of global gross domestic product and rich natural resources.
Adesina said, “Let’s be clear. By seeking to transform the global financial architecture, Africa is just asking for a fair share of access and availability of resources to build on our vast economic opportunities.”
The report highlights the glaring inadequacies of the current global financial system in closing Africa’s financing gap for structural transformation, estimated at US$402.2 billion annually between now and 2030.
Every year, the African Economic Outlook report provides timely evidence and analysis crucial for African policymakers, empowering them to make informed decisions.
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