East African Gazette
Ethiopia
The President of the African Development Bank (ADB), Dr Akinwumi Adesina said Africa will account for eleven of the world’s 20 fastest-growing economies in 2024, the African Development Bank Group in its latest Macroeconomic Performance and Outlook (MEO).
President of the ADB Adesina noted this during the continental latest MEO released on Friday Addis Ababa, 16 February 2024.
Adesina said the 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 said.
Despite the COVID pandemic that affects our economy. Uganda economic growth was listed at 6%.
The top 11 African countries projected to experience strong economic performance forecast are Niger (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%), and Togo (6%).
Adesina said “Despite the challenging global and regional economic environment, 15 African countries have posted output expansions of more than 5%.He called for larger pools of financing and several policy interventions to further boost Africa’s growth.
He appealed to the countries need to do a better job of managing and deriving greater revenue from their enormous natural resources, through better governance, transparency, avoiding transfer pricing and to appropriate value is generated from royalties and taxes.
“By November 2023, 21 African countries were at high risk of debt distress or already in debt distress. Sovereign spreads have eased from their peak early in 2023 but borrowing costs are likely to remain elevated despite planned rate cuts in Europe and the United States” He explained. .
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.
In the report it calls for cautious optimism given the challenges posed by global and regional risks.It heighted rising geopolitical tensions, increased regional conflicts, and political instability.
President Adesina emphasised that fiscal deficits have improved, as faster-than-expected recovery from the pandemic helped shore up revenue.
He explained “This 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 said 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.
The Chief Economist and Vice President, Prof Urama said “Growth in Africa’s top-performing economies has benefitted from a range of factors that range from the declining commodity dependence. And this covers economic diversification, increasing strategic investment in key growth sectors, rising both public and private consumption”
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.
Minister of Finance and Economic Development Zimbabwe, 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.
Ncube said in his country they expect 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.” he said.
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 and warned that Africa is paying a very high-risk premium for debt financing.
“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,” Sachs 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.
Development regionally
East Africa: East Africa will continue to lead Africa’s growth momentum, with growth projected to rise to 5.1% in 2024 and 5.7% in 2025, supported by strong strategic investments to improve internal connectivity and deepen intra-regional trade.
North Africa: Successive adverse weather conditions and macroeconomic challenges will hold the region’s growth steady at 3.9% in 2024 with a slight improvement to 4.1% in 2025.
Central Africa: Growth is forecast to moderate to 3.5% in 2024 but projected recovery in private consumption and increases in mining investment and exports could help push growth to 4.1% in 2025.
Southern Africa: Growth will remain sluggish at 2.2 and 2.6% in 2024 and 2025, respectively. This reflects continued economic weakness in South Africa, the region’s largest economy.
West Africa: Growth is projected to pick up to 4 and 4.4% in 2024 and 2025 respectively. Strong growth in most countries in the region is projected to offset slowdowns in Nigeria and Ghana.
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