Africa is set to outperform the whole world over the next two years in terms of economic growth, with real Gross Domestic Product(GDP) averaging 4% according to AfDB Group. African Development Bank Group in one of their reports for Africa said this is higher than the projected global averages of 2.7% and 3.2%.
The African Development Bank(AfDB) Group is among the largest development institutions on the African continent, by providing both financial support and technical advice at the same time for its 55-member countries.
With a broad regional growth analysis, reports show that all of the continent’s five regions remain strong with a steady outlook despite facing a whole lot of significant headwinds due to global socio-economic shocks. It also helps identify potential risks and calls for robust monetary and fiscal measures backed by structural policies to address them.
Amid Russia’s invasion of Ukraine, affected the average estimate of real GDP in Africa to slow down to 3.8% in 2022 from 4.8% in 2021. Despite the economic slowdown, 53 of Africa’s 54 countries posted positive growth.
The top five performing economies of Africa are projected to grow by more than 5.5% on average in 2023-2024. To reclaim their position among the world’s 10 fastest growing economies. Those countries include;
- Rwanda – 7.9%
- Côte d’Ivoire – 7.1%
- Benin – 6.4%
- Ethiopia – 6.0%
- Tanzania – 5.6%
The AfDB along with the prediction, advocate for robust measures to address the risk as stated earlier in this article. Which includes a mixture of monetary, fiscal and structural policies including;
- Timely and very aggressive monetary policy tightening in countries with acute inflation. Coordination with fiscal policy will also further strengthen the levers to ease inflationary pressures.
- Enhancing resilience by boosting intra-Africa trade, especially in manufacturing products to cushion economies from relative commodity prices.
- The acceleration of structural reforms to build tax administration capacity, investments in digitalization and e-governance to enhance transparency and reduce illicit financial flows.
- Reducing structural budget deficits and the accumulation of public debt in countries facing a high risk of debt distress/ already in debt distress.
- Enacting policies and improving institutional governance that can leverage the private
sector financing especially in climate-proof and mobilizing Africa’s resources for inclusive and sustainable development.
Some of the challenges the continent is currently facing that could hinder this AfDB predictions of Africa economic Growth domination includes;
- Soaring of foods and energy prices.
- Tightening global financial conditions.
- Associated increase in domestic debt service costs.
- Climate change also with its damaging impact on domestic and food supply.
- The potential risk of policy reversal in countries like Nigeria holding elections in February 2023
Africa has a significant role to play in driving inclusive growth and sustainable
development globally. There are smart investments in key sectors; agriculture, minerals,
energy market, and health infrastructure / industries, light manufacturing,
transport and logistics, digital economy and more. The continent remains a treasure
trove for smart investors globally.
