Most of Africa’s 54 countries will probably experience economic growth in 2024, according to the African Development Bank Group’s (AfDB) latest African Economic Outlook. However, the report emphasizes the importance of tackling governance, transparency, accountability, and natural resource management for sustained growth.
Africa’s Growth Potential: A Remarkable Outlook
The report, launched at the AfDB’s Annual Meetings in Nairobi, portrays Africa’s growth potential as “remarkable,” maintaining its position as the second fastest-growing region after developing Asia in 2024 and 2025. Notably, 41 countries are going to achieve even higher growth rates in 2024 compared to 2023.
Energy Challenges and Critical Mineral Opportunities
Despite this positive outlook, energy deficiencies remain a challenge. The report highlights the need for universal electricity access by 2030 or 2063, aligning with SDG 7, the AfDB’s New Deal on energy for Africa, and Agenda 2063. Increasing per capita consumption is also crucial to match high-performing developing countries.
However, critical and rare earth minerals present a significant opportunity for Africa. The continent holds vast reserves of essential minerals like platinum, cobalt, and diamonds, which can significantly boost government revenues and complement tax income. These resources are pivotal to many African economies, driving export earnings and government revenue.
Resource Rent: A Potential Catalyst for Transformation
In 2021, African economies generated $277 billion in resource rents, primarily from forest products, oil, minerals, and to a lesser extent, coal and natural gas. The report emphasizes that effective valuation, management, and utilization of these resources can generate substantial revenue to finance structural transformation.
Urgent Need for Action to Achieve Sustainable Development Goals
However, the report cautions that Africa is not on track to meet most Sustainable Development Goals by 2030. Without corrective measures, including efforts to reverse the increasing poverty rate, Africa could be home to almost nine out of ten (87%) of the world’s extreme poor by 2030.
AfDB’s Perspective on Africa’s Future
AfDB President Dr. Akinwumi Adesina expressed pride in the growth projections for many African countries but acknowledged the challenges ahead. He emphasized the need to tackle governance, transparency, accountability, and the management of natural capital.
Key to Success: Strategic Policies and Political Commitment
Professor Kevin Chika Urama, AfDB Chief Economist and Vice President, underscored the importance of strategic policies and firm political commitment for effectively utilizing resource wealth to generate domestic revenue. He also highlighted the crucial role of both hard infrastructure (roads, railways, bridges) and soft infrastructure (knowledge, institutional governance) in driving Africa’s structural transformation.
Regional Growth Performance and Outlook in Africa
East Africa:
As the fastest-growing region in Africa, East Africa anticipates a substantial increase in real GDP growth from an estimated 1.5% in 2023 to 4.9% in 2024 and 5.7% in 2025. However, the ongoing conflict in Sudan has led to larger-than-expected contractions in Sudan and South Sudan, resulting in a slight downward revision of 0.2 percentage points for 2024 compared to the January 2024 Africa’s Macroeconomic Performance and Outlook (MEO) forecast.
Central Africa:
Growth in Central Africa is expected to moderate from 4.3% in 2023 to 4.1% in 2024, before rebounding to a robust 4.7% in 2025. This upward revision is attributed to anticipated stronger growth in Chad and the Democratic Republic of Congo, driven by favorable metal prices.
West Africa:
West Africa is projected to experience accelerated growth, rising from an estimated 3.6% in 2023 to 4.2% in 2024, and stabilizing at 4.4% in 2025. This upward adjustment of 0.3 percentage points for 2024, compared to the January MEO 2024 projections, reflects stronger growth in major economies like Côte d’Ivoire, Ghana, Nigeria, and Senegal.
North Africa:
Growth in North Africa is forecast to decelerate from an estimated 4.1% in 2023 to 3.6% in 2024, before recovering to 4.2% in 2025. This represents a downward revision of 0.3 percentage points for 2024 compared to the January 2024 MEO. Except for Libya and Mauritania, growth projections for all other countries in the region have been revised downward.
Southern Africa:
Southern Africa anticipates a slight growth increase from an estimated 1.6% in 2023 to 2.2% in 2024, further solidifying to 2.7% in 2025. This represents a 0.1 percentage point upgrade over the January 2024 projections, primarily due to a 0.7 percentage point increase in South Africa’s projected growth. However, this positive outlook in South Africa offsets the combined effect of downward revisions in Angola, Botswana, Lesotho, Zambia, and Zimbabwe.tunesharemore_vert
A Call for Reform: Transforming the Global Financial Architecture for Africa
Additionally, the report calls for a comprehensive overhaul of the global financial architecture to facilitate the transformation of African economies. This includes granting Africa a stronger voice in multilateral development banks and international financial institutions, commensurate with its growing share of global GDP and abundant natural resources.
AfDB President Adesina emphasizes that Africa seeks a fair share of access to resources to capitalize on its vast economic opportunities. The report highlights the current global financial system’s shortcomings in addressing Africa’s financing gap for structural transformation, estimated at $402.2 billion annually until 2030.
Key Steps to Advance African Economies
To bridge this gap, the report proposes a bold agenda for reforming the global financial architecture, focusing on five key areas:
- Leveraging private sector financing: Mobilizing private capital to invest in African infrastructure and development projects.
- Simplifying the global climate finance architecture: Ensuring easier access to climate finance for African countries to address climate change challenges and invest in sustainable development.
- Reforming Multilateral Development Banks (MDBs): Enhancing MDBs’ responsiveness to Africa’s needs and priorities.
- Streamlining debt resolution mechanisms: Creating efficient and equitable mechanisms to address debt challenges and prevent unsustainable debt burdens.
- Enhancing domestic resource mobilization: Strengthening African countries’ capacity to generate and manage domestic revenues effectively.
While the report acknowledges the importance of domestic resource mobilization, it also stresses the need for prudent use of these resources. It urges countries to build capacity to improve public finance management.