AfDB pegs Africa’s growth at 4.3% as continent eyes $402b investment

•Nigeria’s growth projection at 3.3%, inflation pegged at 26.2%
Economies on the African continent have been estimated to grow by 4.3 per cent between 2024 and 2025, raising optimism of a rebound and sustained economic growth across Africa.

In an African Economic Outlook, released yesterday, at the ongoing Annual General Meeting of the African Development Bank (AfDB) Group, in Nairobi, Kenya, the real gross domestic product (GDP) growth was projected to rise to 3.7 per cent in 2024 and consolidate higher at 4.3 per cent in 2025.

Within the period, Nigeria’s economy is expected to grow by 3.3 per cent while inflation could slow to 26.2 per cent, according to the outlook.

Stakeholders reckoned that the sustained increase in Africa’s average GDP growth underscores its resilience and benefits of policies instituted to mitigate the impacts of underlying shocks and put economies back on a higher growth trajectory.

President of the AfDB, Dr Akinwumi Adesina, noted that Nigeria and its sister countries have shown incredible resilience in the last four years contending with multiple overlapping exogenous shocks.

These include persistently high food and energy prices on the back of the sustained impacts of Russia’s invasion of Ukraine and other geopolitical tensions, climate change and extreme weather events on agricultural productivity and electricity generation, and pockets of political instability and conflicts.

Proudly, he said Africa remains the second-fastest growing region in the world after developing Asia.

“To underscore this, 41 countries are set to post higher growth in 2024 relative to 2023, and 15 are projected to grow by more than five per cent in 2024. Further, 10 African countries will be among the world’s top 20 fastest-growing economies, a trend sustained for more than a decade,” he said.

The progress notwithstanding, Adesina said, “nobody eats GDP”. More so, the growth rate has been too little to offset increases in population growth and drive the transformation urgently needed on the continent.

Unfortunately, traditional sectors continue to drive Africa’s growth and employment. The structural transformation that has been observed across the continent has lacked a marked level of industrialisation.

“Despite accounting for 42 per cent of the continent’s workforce, productivity in the agricultural sector is still 60 per cent lower than the average productivity of the economy. This transformation trajectory needs to change.”

He added that Africa’s governments and policymakers should reconfigure their policy tools to engender and accelerate Africa’s structural transformation.

To improve agricultural productivity, he called for the establishment of Special Agro-industrial Processing Zones. Also, to prioritise investments in key areas of the Sustainable Development Goals — education, energy, productivity and infrastructure, to fast-track structural transformation and catch up with high-performing developing countries from other regions.

He said further that mobilising the resources to close the estimated annual financing gap of $402 billion for strategic investments in these areas would not be easy.

“Despite the recent recovery in revenues, Africa still has limited fiscal space, exacerbated by high debt-service payments. Expanding tax capacity and catalyzing private sector investments in critical sectors will be key to mobilising the colossal resources for Africa’s structural transformation,” Adesina said.

Chief Economist and Vice President of the Bank, Prof. Kelvin Urama, said while the projection is good, African countries needed a 10 to 15 per cent consistent growth rate for four to five decades to accelerate structural transformation and catch up with the rest of the world.

Urama emphasized that the progress potential of the continent is not in doubt but for the requisite financial prudence and changes in financing models of multilateral development banks (MDBs) and international financial institutions.

Amid the debt burden that would cost the African countries about $72 billion in debt servicing this year, an estimated $600 billion is still lost yearly because of illicit financial flow and corruption, among others, on the continent.