• Says Africa’s Economic Growth’ll Outpace Global Forecast In 2023, 2024

A new report, Africa’s Macroeconomic Performance and Outlook by the African Development Bank Group, released on Thursday in Abidjan says Nigeria’s economy may benefit from ongoing efforts to restore security in its restive oil-producing Niger-Delta region.

Nigeria’s growth forecast in 2023, the report said, is despite the negative impact of the Covid-19 pandemic on the country, in addition to other issues like insecurity, and weak oil production at a time of higher international oil prices.

The report, however, estimated that growth in West Africa may have slowed to 3.6% in 2022 from 4.4% in 2021, reflecting what it called decelerations in Côte d’Ivoire and Nigeria, the region’s two largest economies.

According to the outlook, Africa may outperform the rest of the world in economic growth over the next two years, with real gross domestic product (GDP) averaging around 4% in 2023 and 2024, higher than projected global averages of 2.7% and 3.2% by the World Bank Group.

The report, however, sees all the continent’s five regions staying resilient with a steady outlook for the medium-term, despite facing significant headwinds due to global socio-economic shocks. It also identified potential risks and called for robust monetary and fiscal measures, backed by structural policies, to address them.

The Macroeconomic Performance and Outlook report, which will be released in the first and third quarters of each year complements the AfDB’s existing annual African Economic Outlook report, which focuses on key emerging policy themes relevant to the continent’s development.

The report shows that estimated real GDP average growth in Africa slowed to 3.8% in 2022, from 4.8% in 2021 amid significant challenges following the Covid-19 shock and Russia’s invasion of Ukraine. Despite the economic slowdown, 53 of Africa’s 54 countries posted positive growth.

However, the report sends a cautionary note on the outlook following current global and regional risks such as soaring food and energy prices, tightening global financial conditions, and the associated increase in domestic debt service costs. Climate change—with its damaging impact on domestic food supply and the potential risk of policy reversal in countries holding elections in 2023—pose equally challenging threats.

It advocates bold policy actions at national, regional, and global scales to help African economies mitigate the compounding risks.

Speaking during the launch, AfDB President, Dr. Akinwumi Adesina, said the new report came at a time when African economies faced with significant headwinds, were proving their resilience.

“With 54 countries at different stages of growth, different economic structures, and diverse resource endowments, the pass-through effects of global shocks always differ by region and by country. Slowing global demand, tighter financial conditions, and disrupted supply chains therefore had differentiated impacts on African economies,” he said.

Continuing, Adesina noted that “despite the confluence of multiple shocks, growth across all five African regions was positive in 2022—and the outlook for 2023–24 is projected to be stable.”

Also commenting, Niale Kaba, Minister of Planning and Development of Côte d’Ivoire, said “the release of this report by our bank, the African Development Bank Group, at this time of the year is an excellent opportunity for Africa and its global partners. We need these regular updates to assess our countries’ macroeconomic performance and prospects. This reliable information will help decision-making and risk management for potential investors in Africa.”

Africa’s pre-Covid-19 top five performing economies are projected to grow by more than 5.5% on average in 2023-2024 and to reclaim their position among the world’s 10 fastest-growing economies. They are Rwanda, 7.9%; Côte d’Ivoire, 7.1%; Benin, 6.4%; Ethiopia, 6.0%; and Tanzania, 5.6%.

Other African countries projected to grow by more than 5.5% in the 2023-24 period, are the Democratic Republic of Congo, 6.8%; The Gambia, 6.4%; Mozambique, 6.5%; Niger, 9.6%; Senegal, 9.4%; and Togo, 6.3%.

At the launch, economist Jeffrey Sachs, Director of the Centre for Sustainable Development at Columbia University commended the report which he said showed that African economies are growing and growing consistently.

Sachs, who is also United Nations Secretary-General Antonio Guterres’ Advocate for Sustainable Development Goals, said: “Africa can and will rise to growth of 7 percent or more per year consistently in the coming decades.  What we’ll see, building on the resiliency we see in this report, is a real acceleration of Africa’s sustainable development so that Africa will be the fast-growing part of the world economy. Africa is the place to invest.”

Bold policy actions to help African economies mitigate the compounding risks

The report advocates robust measures to address the risk such as a mix of monetary, fiscal, and structural policies including timely and aggressive monetary policy tightening in countries with acute inflation, and cautious policy tightening in countries where inflationary pressures are low. Coordination with fiscal policy will further strengthen the levers to ease inflationary pressures.

Other are enhancing resilience by boosting intra-Africa trade, especially in manufacturing products to cushion economies from volatile commodity prices; accelerating structural reforms to build tax administration capacity and investments in digitalization and e-governance to enhance transparency, reduce illicit financial flows, and scale up domestic resource mobilization; and improving institutional governance and enacting policies that can leverage the private sector financing especially in climate-proof and pandemic-proof greenfield projects—and mobilizing Africa’s resources for inclusive and sustainable development.

Other are taking decisive action to reduce structural budget deficits and the accumulation of public debt in countries facing a high risk of debt distress or already in debt distress.

According to an overview of economic outlook across regions, despite the confluence of multiple shocks, growth across all five African regions was positive in 2022—and the outlook for 2023–24 is projected to be stable.

Central Africa –Bolstered by favorable commodity prices, growth is estimated to have been the continent’s fastest at 4.7%, up from 3.6% in 2021; while Southern Africa –Growth decelerated the most, to about 2.5% in 2022 from 4.3% in 2021. This slowdown reflects subdued growth in South Africa, as higher interest rates, weak domestic demand, and persistent power outages weighed on the economy.

In his presentation, AfDB’s Acting Chief Economist and Vice President Kevin Urama observed that Africa is still a favorable destination for investments in human capital, infrastructure, private sector development, and natural capital.

Urama said: “Africa has a significant role to play in driving inclusive growth and sustainable development globally. There are many smart investment opportunities in key sectors: agriculture, energy markets, minerals, health infrastructure and pharmaceutical industries, light manufacturing, transport and logistics, digital economy and more. The continent remains a treasure trove for smart investors globally.”