African economies have demonstrated resilience and strong rebound, necessary for increased investment into the world’s second largest continent– the African Development Bank (AfDB) has observed.
According to the Bank, despite the confluence of multiple shocks, growth across all five African regions was positive in 2022, with an outlook for 2023 and 2024 projected to be stable.
Such recovery the Bank said had positioned the continent for investment into many of its untapped areas of investment for mutual benefit, especially climate change and green growth.
“Africa holds immense investment potential across agriculture, energy, and ICT. Let’s come together to harness the huge opportunities in Africa to drive the collective goal of saving the planet,” Professor Kevin Chika Urama, Chief Economist and Vice President Economic Governance and Knowledge Management, AfDB said.
He was presenting key highlights of the report, which was launched on Wednesday at the annual meetings in Sharm El Sheikh, Egypt.
This development comes as the Bank seeks to mobilise US$213.4 million annually and $2.7 trillion by 2030 through private sector support for climate change and green growth.
The outlook observed that five African countries would bounce back into the top 10 global fastest growing economies in 2023, with a rate of 5.5 per cent.
“The growth is been driven by structural challenges in the last 10 decades, strong democracies, public financial management policies despite the continent battling with economic challenges,” he said.
Prof Urama said, “the rebound of African economies came after an impressive recovery in 2021 after the shock of the COVID-19 pandemic, which saw African economies slowed amid significant headwinds in 2022, but they remain resilient with a stable outlook.”
In his remarks on the report, Dr Akinwumi Ayodeji Adesina, President, AfDB, said the report “shows in the face of challenges, African economies have demonstrated remarkable resilience.”
He added that: “African economies are moving in the right direction. Five of the six pre-pandemic top performing economies are set to be back in the league of the world’s 10 fastest growing economies in 2023-2024.”
For Hassan Abdalla, Chairperson of the Board of Governors, AfDB and Governor of the Central Bank of Egypt, mitigating risks and fostering private sector returns required that Africa focused on unlocking the full potential of the private sector to support economic growth and financing.
“What we need to do is to get this mix of innovation, risk return and scalability right to attract the private sector at scale,” Ms Heike Harmgart, Managing Director, Southern and Eastern Mediterranean Region (EBRD) said.
Africa achieved an average growth rate of 3.8 per cent in 2022, surpassing the global average of 3.4 per cent in 2022, and with a projected growth rate of 4.1 per cent for both 2023 and 2024.
However, there were some observed downsides in the continent’s outlook, including high interest rates, losses and damages due to extreme weather events, and dependence on commodity exports with limited value addition.
Regional conflicts in key hotspots such as Burkina Faso, Democratic Republic of Congo, Ethiopia, Mali, and Mozambique as well as political risks due to upcoming national elections in some countries are forecasted to impact on Africa’s economic outlook.
The report recommended a mix of monetary, fiscal, and structural policies to position the continent to grow steadily going forward, including timely and aggressive monetary policy tightening, boosting intra-Africa trade, especially in manufactured products and building tax administration capacity and investments in digitalisation and e-governance.