BIRD STORY AGENCY
AFRICA’S gross domestic product (GDP) is projected to grow at 4 per cent over 2023–24, according to the African Development Bank Group (AfDB).
In the inaugural release of a report dubbed ‘Africa’s Macroeconomic Performance and Outlook’ released on January 19, the group reported that “growth across all five African regions was positive in 2022 and the outlook for 2023–24 is projected to be stable.”
The projections are higher than expected global figures (2.7% and 3.2% respectively) for the same period.
Africa’s top five performing economies before the COVID-19 pandemic are expected to grow by over 5.5% on average in 2023-2024 and reclaim their position among the world’s ten fastest-growing economies.
Those include Rwanda, which is projected to grow by 7.9%, Côte d’Ivoire by 7.1%, Benin by 6.4%, Ethiopia by 6.0%, and Tanzania by 5.6%.
But there is a clutch of other African countries that are also expected to grow their economies by more than 5.5% in the same period. Those include Niger at 9,6%, Senegal at 9.4%, The Democratic Republic of Congo at 6.8%, The Gambia at 6.4%, Mozambique at 6.5% and Togo at 6.3%.
In East Africa, growth is projected to rise from 4.2% in 2022 to 5% in 2023 and 5.4% in 2024, with Rwanda leading the region.
Uganda and Ethiopia are also projected to grow strongly in 2023 and 2024, exceeding 5% due to developments in the oil sector for Uganda and continued infrastructure spending for Ethiopia.
Growth in West Africa is projected to rise from 3.6% in 2022 to 4.1% in 2023 and 4.3% in 2024, with Côte d’Ivoire and Senegal boosting the region’s growth.
Central Africa is projected to see a slight decline from 4.7% in 2022 to 4.3% in 2023 and to stabilise at 4.2% in 2024.
The southern African region, weighed down by economic woes in South Africa, has the lowest growth rates, despite standout performer, Mozambique.
“In the medium term, however, persistent weakness in South Africa will continue to weigh on the region, with real output projected to decelerate to 2.3% in 2023 before rising to 2.8% in 2024.”
Growth in the south will be primarily driven by Mozambique, which will see economic growth boosted by investment in liquefied natural gas and allied industries.
In northern Africa, growth is projected to stabilise at 4.3% in 2023, supported by an expected strong recovery in Libya and Morocco.
Economist Jeffrey Sachs believes such trends show that “Africa can and will rise to a growth of 7% or more per year consistently in the coming decades.”
“Africa will be the fast-growing part of the world economy. Africa is the place to invest,” he noted during the report’s launch.
According to Akinwumi Adesina, African Development Bank Group President, the overall steady growth witnessed across the board is commendable because it is seen despite “the pass-through effects of global shocks hitting hard and differing by region and by country.”
Like the rest of the world, Africa is significantly challenged by soaring food and energy prices, tighter global financial conditions, and increased domestic debt.
“Household Impacts of Tariffs, a survey, indicates, in 29 African countries, households spent on average 36.3% of their income on food items,” the report reads in part.
A similarly high burden is registered in the case of energy prices amidst supply cuts due to the Russia-Ukraine war.
“Crude oil prices increased by about 20%, from $93.50 per barrel to $112.40 and averaged $102.80 between March and October 2022,” the report reveals.
Amidst these challenges, the report calls for robust monetary and fiscal measures backed by structural policies to address potential risks.
With inflationary pressures anticipated to heighten between 2023 and 2024, the report recommends various measures depending on the degree of impact and vulnerability in individual countries.
In countries where inflation is most acute, timely and aggressive monetary policies are advised.
“Countries with lower inflation will need to undertake cautious tightening of monetary policy so as not to undermine growth efforts while keeping inflation in check.”
However, the report underscores the continent’s outstanding opportunities, mainly focusing on the need for countries to accelerate the implementation of the African Continental Free Trade Area (AfCFTA).
According to the report, the AfCFTA has the potential to create a competitive continental market that will cushion the continent from multiple shocks.
The World Economic Forum projects a growth of 28% in intra-African freight demand thanks to AfCFTA, which will open up a need for nearly 2 million trucks, 100 000 rail wagons, 250 aircraft and more than 100 vessels by 2030.