Africa’s Economy Set for Strong Growth in 2024, AfDB Says

ADDIS ABABA – Africa will account for eleven of the world’s 20 fastest-growing economies in 2024, the African Development Bank (AfDB) said in its latest Macroeconomic Performance and Outlook (MEO) on Friday.

Overall, real gross domestic product (GDP) growth for the continent is expected to average 3.8% and 4.2% in 2024 and 2025, respectively.

This is higher than projected global averages of 2.9% and 3.2%, the report says.

The top three African countries projected to experience strong economic performance this year are Niger (11.2%), Senegal (8.2%), and Libya (7.9%).

They will be followed by Rwanda (7.2%), Côte d’Ivoire (6.8%), Ethiopia (6.7%), Benin (6.4%), Djibouti (6.2%), Tanzania (6.1%), Togo (6%), and Uganda at 6%.

“We expect this growth to be broad-based, although domestic supply bottlenecks such as shortfalls in electricity generation are still lingering,” AfDB Group President Akinwumi Adesina said.

‘Outlook vulnerable to shocks’

The biannual MEO report, however, 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 emphasized that fiscal deficits have improved, as faster-than-expected recovery from the pandemic helped shore up revenue.

“This has led to a stabilization 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 stabilization is also due to the fiscal consolidation measures, especially in countries with elevated risks of debt distress,” he said.

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

‘Dangerous Short-term Loans’

Director of the Center 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.

He further warned that Africa is paying a very high-risk premium for debt financing, calling for this point to be made to the G20 platform.

“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 also called for a much larger African development bank, better resourced to meet Africa’s financing needs.