The African Development Bank Group (AfDB) says an estimated 30m people across Africa were pushed into extreme poverty in 2021, despite the continent’s estimated 6.9% GDP growth, as reported in its 2022 African Economic Outlook, released on Wednesday.
According to the African Economic Outlook released on Wednesday, the growth was an aftermath of the pandemic-induced contraction of 1.6% the continent suffered in 2020, even as rising oil prices and global demand generally helped improve Africa’s macroeconomic fundamentals, the report noted.
The report warns that the pandemic, Russia’s invasion of Ukraine and the ensuing war could pose considerable challenges in the medium term to Africa’s strong recovery in the last year, as it could leave a lasting impression over several years, if not as much as a decade. This, the report noted, is made worse by the lingering effects of the Covid-19 pandemic, resulting in about 22 million job losses in the same year.
This trend, according to the group is expected to continue through this second half of 2022 and on into 2023, even as the economic disruptions stemming from the Russia-Ukraine war could push a further 1.8m people across the African continent into extreme poverty this year, swelling by another 2.1m in 2023.
As such, the AfDB Group warned that Africa’s growth could decelerate to 4.1% in 2022, and remain stuck there in 2023, because of the lingering pandemic and inflationary pressures caused by the war between Russia and Ukraine major grain suppliers to Africa.
The report estimates the continent’s additional financing needs for 2020-22 at $432bn, adding that financing African countries’ nationally determined contributions—public pledges from countries on how they plan to play a part in post-2020 collective action on climate change—will require up to $1.6tr between 2022 by 2030.
The least emitter of climate forcing emissions, Africa is disproportionately affected by climate change, as the continent loses between 5% to15% of gross domestic product to climate change. Collectively, African countries received only $18.3 billion in climate finance between 2016 and 2019. This leaves a climate finance gap of up to $127.2 billion annually from 2020 to 2030.
The AfDB Group said it has responded to the likelihood of a looming food crisis with a $1.5bn African Emergency Food Production Facility approved by its executive board last week, quoting the president, Dr Akinwumi Adesina, as saying international efforts, including those of the G20 Common Framework for Debt Treatment, and the $650bn in Special Drawing Rights issued by the International Monetary Fund, are supporting the continent’s recovery.
However, he continued, the recovery will still be costly, as “Africa will need at least $432bn to address the effects of Covid-19 on its economies and on the lives of its people — resources it does not have.”
With the theme “Supporting Climate Resilience and a Just Energy Transition in Africa,” the 2022 African Economic Outlook, launched during its Annual Meetings in Accra, Ghana, highlights a growing threat to lives and livelihoods in Africa.
Commenting on the report, the Acting Chief Economist and Vice President, Kevin Urama, said “climate change is the most existential challenge to Africa’s development today. Finding policies that address climate adaptation and mitigation of greenhouse gas emissions while ensuring social and economic development is one of the most enduring policy challenges of our time.”
He added that “the African Economic Outlook report 2022 provides evidence-based policy options for driving inclusive growth by building climate resilience and a just energy transition in Africa.”
The report estimates that Africa will have a carbon credit of up to $4.8tr by 2050, based on the current social cost of carbon. The report underscores Africa’s vulnerability to climate change. In 2020 and 2021, Africa recorded 131 extreme-weather, climate change-related disasters.
The report calls on the international community to meet commitments such as the $100bn annual financing promised by rich nations to support climate action in developing countries. It records the billions of dollars lost to climate events each year in Africa, as well as the economic prospects of green growth. It suggests, for example, that Africa could gain about 20.5 million more jobs by 2050 if the world adjusts its energy consumption and manages to maintain global warming at 1.5 degrees Celsius above pre-industrial levels.
The 2022 African Economic Outlook proposes a series of policy recommendations to build back better and engender resilient economies in Africa. Proposals include speeding up Covid-19 vaccination and delivering strong support to domestic pharmaceutical industries; reducing reliance on single food sources; and revisiting global debt frameworks.
The 2022 African Economic Outlook theme, the group said in a statement, also ties in with the United Nations Climate Conference, COP 27, also known as the “African COP,” which Egypt will host in November. It will be the first time in five years that the United Nations climate conference will be held in Africa, and it comes as the continent faces an alarming increase in climate-related disasters.