New AfDB Report Projects 3.3% GDP Growth, 20.4% Inflation For Nigeria In 2024

  • Says African Among World’s 20 Fastest Growing Economies

African Development Bank Group (AfDB), on Friday released its latest Macroeconomic Performance and Outlook (MEO), highlights of which shows Africa dominating the list of the world’s 20 fastest-growing economies in 2024.

Africa’s Macroeconomic Performance and Outlook is a biannual publication released in the first and third quarters of each year, and complements the existing African Economic Outlook (AEO), which focuses on key emerging policy issues relevant to the continent’s development.

The report projects a 3.3% GDP growth and inflation rate at 20.4% for Nigeria, the continent’s largest economy, even as it says the announced withdrawal of neighbours- Burkina Faso, Mali, and Niger from the Economic Community of West African States (ECOWAS) casts a shadow over the sustainability of gains amid growing uncertainty.

Despite the poor showing by Nigeria, the report said the continent’s overall real gross domestic product (GDP) growth could average 3.8% and 4.2% in 2024 and 2025, respectively.

This, it said, is higher than projected global averages of 2.9% and 3.2%, with Africa accounting for 11 of the world’s 20 fastest-growing economies this year, just as it is forecast to remain the second-fastest-growing region after Asia.

The top 11 African countries forecast to experience strong economic performance are Niger with 11.2%; Senegal, 8.2%; Libya, 7.9%; Rwanda, 7.2%; Cote d’Ivoire, 6.8%; Ethiopia, 6.7%; Benin, 6.4%; Djibouti, 6.2%; Tanzania, 6.1%; Togo, 6%; same as Uganda.

The report shows that the medium-term growth outlook for the continent’s five regions is slowly improving, a pointer to the continued resilience of Africa’s economies.

Commenting on the outlook, AfDB’s Group President, Dr Akinwumi Adesina who called for larger pools of financing and several policy interventions to further boost Africa’s growth, said “despite the challenging global and regional economic environment, 15 African countries have posted output expansions of more than 5%.”

The MEO report provides an up-to-date evidence-based assessment of the continent’s recent macroeconomic performance and short-to-medium-term outlook amid dynamic global economic developments.

The latest report calls for cautious optimism given the challenges posed by global and regional risks. These risks include rising geopolitical tensions, increased regional conflicts, and political instability—all of which could disrupt trade and investment flows, and perpetuate inflationary pressures.

Adesina emphasised the improvements in fiscal deficits as faster-than-expected recovery from the pandemic helped shore up revenue.

This, he explained, “has led to a stabilisation of the average fiscal deficit at 4.9% in 2023, like 2022, but significantly less than the 6.9% average fiscal deficit of 2020. The stabilisation is also due to the fiscal consolidation measures, especially in countries with elevated risks of debt distress.”

He cautioned that with the global economy mired in uncertainty, the fiscal positions of the African continent will continue to be vulnerable to global shocks.

The report shows that the medium-term growth outlook for the continent’s five regions is slowly improving, a pointer to the continued resilience of Africa’s economies.

Presenting the key findings of the report, the African Development Bank’s Chief Economist and Vice President, Prof. Kevin Urama said: “growth in Africa’s top-performing economies has benefitted from a range of factors, including declining commodity dependence through economic diversification, increasing strategic investment in key growth sectors, and rising both public and private consumption, as well as positive developments in key export markets.”

He added: “Africa’s economic growth is projected to regain moderate strength as long as the global economy remains resilient, disinflation continues, investment in infrastructure projects remains buoyant, and progress is sustained on debt restructuring and fiscal consolidation.”

“The future of Africa rests on economic integration. Our small economies are not competitive in the global market. A healthy internal African trade market can ensure value-added and intra-African production of manufactured goods,” said Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, African Union Commission, Ambassador Albert Muchanga.

He assured that the MEO forecast, and recommendations will be made available to African heads of state and that the report will be useful when the African Union makes its proposals to the G20- an informal gathering of many of the world’s largest economies to which the African Union was admitted last year.

The improved growth figure for 2024 reflects concerted efforts by the continent’s policymakers to drive economic diversification strategies focused on increased investment in key growth sectors, as well as the implementation of domestic policies aimed at consolidating fiscal positions and reversing the increase in the cost of living and boosting private consumption.

Speaking remotely, Zimbabwe’s Minister of Finance and Economic Development, Prof Mthuli Ncube described the report as being “on point” and consistent with the reality in his country, describing it as useful for economic planning across Africa. He urged the African Development Bank to continue its thought leadership to help policymakers continue to build resilience to withstand shocks and drive growth.

Ncube said: “Zimbabwe expects slower growth due to climate shocks in the region. Southern African countries depend on agriculture for economic growth, so climate-proofing agriculture is key. We are in talks with creditors to restructure its debt, which is slowing economic growth. Internally, the country will focus on economic and governance reforms and reforms around property rights to increase agricultural production.”

Up to 41 countries across the continent will in 2024, achieve an economic growth rate of 3.8%, and in 13 of them, growth will be more than 1 percentage point higher than in 2023.

Director of the Centre for Sustainable Development, Columbia University Prof Jeffrey Sachs noted that long-term affordable financing must be part of Africa’s strategy to achieve growth of 7% or more per year and warned that Africa is paying a very high-risk premium for debt financing. He called for this point to be made to the G20.

“Long-term development cannot be based on short-term loans. Loans to Africa should be at least 25 years or longer. Short-term borrowing is dangerous for long-term development. Africa must act as one, in scale,” he explained.

Sachs, who is also the UN Secretary-General António Guterres’ Advocate for Sustainable Development Goals also called for a much larger African Development Bank, better resourced to meet Africa’s financing needs.

In its overview of economic outlook across regions, the report said notwithstanding the confluence of shocks, the resilience of the continent’s economies remains strong, with positive growth projected for the continent’s five regions.

The 2024 MEO says in the short term, tackling persistent inflation will need a mix of restraining monetary policy coupled with fiscal consolidation and stable exchange rates.

It identifies structural reforms and strategic industrial policies as key to accelerating economic diversification and strengthening the export sector, and ecommends that countries invest more in human capital and pursue a resource-based industrialisation and diversification strategy that allows the continent to exploit its comparative advantage and build resilience to shocks.