Leveraging Africa’s resilience

While tackling the same subject, the reports differ in their perspectives and implications. The AfDB Outlook emphasises the resilience and potential of Africa’s growth, highlighting factors that contribute to its recovery and acceleration, and promoting sustainable development and poverty reduction in Africa. Conversely, the IMF report focuses on the challenges and risks that SSA economies face, such as fiscal imbalances, inflation, and debt.

Despite differences in the growth percentages reported by the two outlooks, both agree that two-thirds of the countries will have a positive economic trajectory this year.

The growth pick-up in 2024 will vary significantly across country groups, primarily driven by a rebound among oil exporters. Meanwhile, diversified economies that have been enjoying persistently high growth rates are expected to see their growth remain unchanged.

One of the main factors driving Africa’s growth in 2024 is the growing number of regional trade agreements and economic blocs, which can enhance market access, promote cross-border trade, and foster economic growth through increased regional cooperation.

The African Economic Outlook estimates that the African Continental Free Trade Area (AfCFTA) could increase Africa’s income by $450 billion by 2035 and lift 30 million people out of extreme poverty.

The implementation of the AfCFTA, which creates a single market for goods and services across 54 countries, is contributing to GDP growth. It is expected to boost intra-African trade, enhance competitiveness, foster industrialisation, and increase employment and income.

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Participation in regional trade agreements and economic blocs is also fostering economic growth by improving market access, promoting cross-border trade, and enhancing regional cooperation.

Sound government policies, such as fiscal stimulus packages, monetary measures, and structural reforms, are also creating a conducive environment for businesses to thrive and thereby supporting overall economic growth in the region. Furthermore, increased Foreign Direct Investment (FDI) inflows into sectors such as manufacturing, technology, and services are driving growth by bringing in capital, technology, and expertise.

The growth in Sub-Saharan African (SSA) economies in 2024 is primarily driven by a combination of factors. Firstly, the ongoing recovery from the Covid-19 is significantly boosting economic activities across various sectors such as manufacturing, services, and agriculture.

Additionally, investments in infrastructure projects, including transportation, energy, and telecoms, are stimulating economic growth by creating employment, enhancing connectivity, and attracting investments. Moreover, countries rich in natural resources such as oil, minerals, and agricultural products are benefiting from favourable commodity prices, contributing to their economic growth.

Another factor contributing to Africa’s resilience and potential in 2024 is the diversification and innovation of its economies, especially in the digital and green sectors. The African Economic Outlook highlights the opportunities and challenges of the digital transformation in Africa, which was accelerated by the pandemic.

This transformation enabled new forms of service delivery, e-commerce, education, and financial inclusion. The Outlook also emphasises the need for Africa to pursue a low-carbon and climate-resilient development path, which can generate economic, social, and environmental benefits. It cites examples of green investments and policies in renewable energy, the circular economy, natural capital, and climate adaptation.

The AfDB and IMF outlooks for 2024 agree that the continent’s outlook is positive and promising despite the challenges posed by the pandemic and other external shocks.

The continent has shown remarkable resilience and potential in various sectors, such as natural resources, digital transformation, and the green economy.

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However, to sustain and enhance its growth prospects, Africa needs to implement reforms in the global financial system, which can enable more efficient and equitable allocation of resources, reduce debt vulnerabilities, and increase domestic revenues.

The report also suggests leveraging private sector financing for high-social returns, simplifying the global climate finance architecture, revising debt resolution mechanisms, and enhancing domestic revenue mobilisation through improved tax policies and efficient government revenue collection.

To further boost economic growth, the AfDB Outlook has proposed a five-point agenda for reforming the global financial system. It calls for greater private sector participation in public investments, streamlining the global climate finance architecture, reforming Multilateral Development Banks (MDBs), streamlining debt resolution mechanisms, and strengthening domestic resource mobilisation. By doing so, Africa can achieve its development goals and aspirations, as well as contribute to global recovery and prosperity.

The Writer is Kenya’s Ambassador to Belgium, Mission to the European Union, Organization of African Caribbean and Pacific States and World Customs Organization. The article is written on a personal level.