- African Economic Outlook 2024 calls for an overhaul of the global financial architecture to transform African economies.
- Seventeen African economies are projected to grow by more than 5 per cent in 2024, potentially increasing to 24 by 2025.
- Growth in Southern Africa is projected to pick up slightly from an estimated 1.6 per cent in 2023 to 2.2 per cent in 2024
East Africa is projected to lead GDP growth on the continent, amidst global challenges, according to the African Development Bank Group’s African Economic Outlook 2024 report. This region is expected to see the fastest growth, with real GDP growth rising from an estimated 1.5 per cent in 2023 to 4.9 per cent in 2024 and 5.7 per cent in 2025.
However, the economic uncertainties in South Sudan and Sudan due to conflict have led to a downward revision of 0.2 percentage points for 2024 due to larger-than-expected contractions in the two states. The latest report, unveiled at the Bank’s Annual Meetings in Nairobi, indicates that 41 African countries are expected to experience stronger growth rates in 2024 compared to 2023.
Describing Africa’s growth potential as “remarkable,” the report highlights that the continent will retain its position as the second fastest-growing region after developing Asia through 2024 and 2025. African Development Bank president Dr. Akinwumi Adesina, acknowledged the positive growth projections while emphasizing the importance of addressing governance, transparency, accountability, and the management of natural resources.
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Sustainable Development Goals
“Africa’s future is bright, but we need to ensure that resources are used for the benefit of the people of this continent. Resilience cannot happen unless we deal with climate change,” he said. Adesina also highlighted the importance of investing in young people, their skills, talents, and entrepreneurship, mentioning initiatives like the Youth Entrepreneurship Investment Banks.
Despite these positive outlooks, the report warns that Africa is off track to meet most of the Sustainable Development Goals by 2030, with a sharp increase in poverty unless corrective actions are taken. The AEO forecasts a rebound in Africa’s average growth, with an expected rise to 3.7 per cent in 2024 and 4.3 per cent in 2025, surpassing the projected global average of 3.2 per cent.
Seventeen African economies are projected to grow by more than 5 per cent in 2024, potentially increasing to 24 by 2025. Other regions are also projected to see moderate to robust growth. Central Africa’s growth is expected to moderate from 4.3 per cent in 2023 to 4.1 per cent in 2024 before rising to 4.7 per cent in 2025.
The African Economic Outlook 2024 calls for a comprehensive overhaul of the global financial architecture to better support Africa’s economic transformation. The report proposes greater private sector participation, streamlined climate finance, reforms to multilateral development banks, expedited debt resolution mechanisms, and enhanced domestic resource mobilization.
Adesina emphasized that Africa is seeking a fair share of global resources to build on its economic opportunities.
The report points out the inadequacies of the current financial system in closing Africa’s financing gap for structural transformation, estimated at $402.2 billion annually until 2030.
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African Economic Outlook and analysis
Each year, the African Economic Outlook report provides crucial evidence and analysis for African policymakers, enabling informed decision-making and strategic planning for the continent’s economic future.
Growth performance and outlook by region
East Africa, the continent’s fastest-growing region, will see real GDP growth rising from an estimated 1.5 per cent in 2023 to 4.9 per cent in 2024 and 5.7 per cent in 2025.
The downward revision of 0.2 percentage point for 2024 compared with the forecast in the January 2024 Africa’s Macroeconomic Performance and Outlook (MEO) is due to larger-than-expected contractions in Sudan and South Sudan following the ongoing conflict in the former.
Growth in Central Africa is forecast to moderate from 4.3 per cent in 2023 to 4.1 per cent in 2024 before improving strongly to 4.7 per cent in 2025. The upgraded forecast is due to expectations of stronger growth in Chad and the Democratic Republic of Congo as a result of favourable metal prices.
Growth is projected to pick up in West Africa, rising from an estimated 3.6 per cent in 2023 to 4.2 per cent in 2024 and consolidating at 4.4 per cent the following year. This is an upgrade of 0.3 percentage point for 2024 over the January MEO 2024 projections, reflecting stronger growth in the region’s large economies—Côte d’Ivoire, Ghana, Nigeria, and Senegal.
In North Africa, growth is projected to decline from an estimated 4.1 per cent in 2023 to 3.6 per cent in 2024 and 4.2 per cent in 2025, with a downward revision of 0.3 percentage point for 2024 from the January 2024 MEO. Except for Libya and Mauritania, growth has been revised downward for all other countries in the region.
Growth in Southern Africa is projected to pick up slightly from an estimated 1.6 per cent in 2023 to 2.2 per cent in 2024 and firm up to 2.7 per cent in 2025. The growth rates for 2024 and 2025 show an upgrade of 0.1 percentage point over the January 2024 projections, mainly reflecting a 0.7 percentage point increase in South Africa’s projected growth.
Due to South Africa’s larger weight in the region, the upgraded growth forecast offset the combined effect of downward revisions in Angola, Botswana, Lesotho, Zambia, and Zimbabwe.
African Economic Outlook makes bold proposals to reform the global financial architecture
The African Economic Outlook 2024 calls for an overhaul of the global financial architecture to transform African economies.
This includes giving Africa a greater voice in multilateral development banks and international financial institutions, reflecting its growing share of global gross domestic product and rich natural resources.
Adesina said, “Let’s be clear. By seeking to transform the global financial architecture, Africa is just asking for a fair share of access and availability of resources to build on our vast economic opportunities.”
The report highlights the glaring inadequacies of the current global financial system in closing Africa’s financing gap for structural transformation, estimated at US$402.2 billion annually between now and 2030.
African Economic Outlook 2024 Recommendations
To rectify these disparities, the report proposes a bold agenda for reforming the global financial architecture, including in the five following key areas:
Leveraging Private Sector Financing: The African Economic Outlook advocates for greater private sector participation to complement public investments, particularly in areas with high social returns such as climate action and human capital development.
Simplifying the Global Climate Finance Architecture: The report calls for streamlining the global climate finance architecture to enhance coordination and facilitate access for African countries, which are disproportionately affected by climate change.
Reforming Multilateral Development Banks (MDBs): The AEO urges MDBs to revise their business models to provide long-term concessional financing at scale, to developing countries, bolstering their capital positions, channeling a portion of IMF’s Special Drawing Rights (SDRs) to MDBs and ensuring a healthy replenishment of the concessional windows of the African Development Bank and the World Bank—the African Development Fund and the International Development Association.
Streamlining Debt Resolution Mechanisms: Recognizing the slow and cumbersome nature of existing debt resolution mechanisms, the African Economic Outlook advocates for reforms to expedite debt workouts and ensure sustainable debt management, including innovative market-based solutions like “Brady bonds,” debt relief for climate purposes, and sovereign debt authority systems.
Enhancing Domestic Resource Mobilization: The report emphasizes the importance of strengthening domestic revenue mobilization through improved tax policies, enhancing efficiency in government revenue collection and utilization, combatting illicit financial flows and tax avoidance, and leveraging Africa’s abundant natural resources.
According to the report, “Domestic resource mobilization is good, but so is the prudent use of such resources. Countries should therefore strengthen capacity to improve public finance management”
Every year, the African Economic Outlook report provides timely evidence and analysis crucial for African policymakers, empowering them to make informed decisions.
