The African Development Bank (AfDB) Group projects Africa’s economy to grow by 4.3% between 2024 and 2025. This optimistic forecast was released yesterday during the bank’s Annual General Meeting in Nairobi, Kenya. According to the African Economic Outlook, the continent’s real gross domestic product (GDP) is expected to increase from 3.7% in 2024 to 4.3% in 2025.
Specifically, Nigeria’s economy is anticipated to expand by 3.3%, with inflation predicted to decrease to 26.2%. This growth reflects Africa’s resilience and the effectiveness of policies designed to mitigate shocks from global events and promote a sustainable economic trajectory.
Dr. Akinwumi Adesina, President of the AfDB, highlighted that despite numerous challenges, including high food and energy prices due to Russia’s invasion of Ukraine, climate change impacts, and political instability, Africa remains the second-fastest growing region globally, trailing only developing Asia.
Adesina pointed out that 41 African countries are expected to experience higher growth in 2024 compared to 2023, with 15 of these countries projected to expand by more than 5%. Additionally, 10 African nations are likely to rank among the world’s top 20 fastest-growing economies. This trend has been consistent for over a decade, emphasizing the continent’s sustained economic potential.
However, Adesina cautioned that while GDP growth is promising, it has not been sufficient to counterbalance population increases or achieve the needed transformation. He noted that traditional sectors like agriculture continue to dominate, with productivity in this sector remaining 60% lower than the continent’s average economic productivity.
To address these challenges, Adesina urged African governments and policymakers to reshape their policy frameworks to better support structural transformation. He advocated for the creation of Special Agro-industrial Processing Zones and increased investments in critical Sustainable Development Goals areas such as education, energy, productivity, and infrastructure.
Funding these initiatives remains a formidable task. Adesina estimated that closing the annual financing gap of $402 billion for strategic investments will require expanding tax capacity and leveraging private sector investments.
Chief Economist and Vice President of the Bank, Prof. Kelvin Urama, remarked that although the growth projections are favorable, African countries need to sustain a 10 to 15% growth rate for four to five decades to achieve significant structural transformation and catch up with other regions. Urama emphasized the necessity for financial prudence and innovative financing models from multilateral development banks and international financial institutions.
This growth forecast comes at a time when African nations face a significant debt burden, with approximately $72 billion due in debt servicing this year, while an estimated $600 billion is lost annually to illicit financial flows and corruption. These economic challenges underscore the urgent need for robust financial strategies and anti-corruption measures to ensure Africa’s economic stability and growth.
Source: The Guardian
