Why your days of always being broke are numbered

Africa's economic growth rate is set to expand again in 2024

In Summary

• Africa's growth rate was hit by slowing economies in major markets in 2023

• However, it is set to expand again from 2024, according to the World Bank

Graphic of World Bank projections
Graphic of World Bank projections

Economic growth in Africa is set to slow down from 3.6 per cent in 2022 to 3.1 per cent in 2023, but will bottom out and rise to 3.7 per cent and 3.9 per cent in 2024 and 2025, according to a new World Bank report.

Dubbed Africa's Pulse, the World Bank's April 2023 economic update attributes the growth deceleration to the slowdown in the global economy, high inflation, and the underperformance of the continent's largest economies.

"Stubbornly high inflation and low investment growth continue to constrain African economies. While headline inflation appears to have peaked in 2022, inflation is set to remain high at 7.5 per cent for 2023, and above central bank target bands for most countries," the report said.

The bank said growth in the region, excluding large countries such as Angola, Nigeria, and South Africa, is projected at 4.3 per cent in 2023 and set to expand to 5.1 per cent and 5.2 per cent in 2024 and 2025, respectively.

In Eastern and Southern Africa, economic activity is expected to grow at 3.0 per cent in 2023, down from 3.5 per cent in 2022, but to accelerate to 3.7 per cent and 3.9 per cent in 2024 and 2025, respectively. The economic performance of the subregion is dragged down by the underperformance of two of its largest economies, South Africa and Angola.

"In South Africa, economic activity is set to weaken further as structural constraints — particularly, the energy crisis — and headwinds persist. Growth will decelerate to 0.5 per cent in 2023 (from 2.0 per cent in 2022), and it is expected to rebound to 1.3 per cent in 2024 and 1.6 per cent in 2025," writes the report's authors.

Excluding South Africa and Angola, the Eastern and Southern Africa subregion is expected to grow at 4.4 per cent in 2023, and is set to speed up to 5.1 and 5.3 per cent in 2024 and 2025, respectively.

In Western and Central Africa, economic activity is expected to grow at 3.4 per cent in 2023, down from 3.7 per cent in 2022, and accelerate to 3.9 and 4.0 per cent in 2024 and 2025, respectively. The economic performance of the subregion has been dragged down by Nigeria — its largest economy.

"The Nigerian economy is set to grow by 2.8 per cent in 2023, down from 3.3 per cent in 2022. It is expected to accelerate slightly to an average annual rate of 3 per cent in 2024-25."

Economic activity in the subregion excluding Nigeria is set to grow 4.2% in 2023, rising to 5.3 per cent in 2024-25.

In North Africa, double-digit food price inflation will weigh on the region, causing growth to slow to 3 per cent in 2023 after growing 5.8% in 2022.

"Developing Oil Importers in the region, including Djibouti, Morocco, Egypt and Tunisia, grappled with the double hit of high oil and high food prices — both of which they import — and grew very little. The exception is Egypt, which outpaced other oil importers," the World Bank noted in its Middle East and North Africa update.

World Bank economists expect that developing oil importers will grow on average by 3.6 per cent in 2023 and 3.7 per cent in 2024. These projections reflect moderately high growth forecasts for Egypt, expected to grow at 4.0% in both fiscal years 2023 and 2024.

Relative to other developing oil importers in North Africa, Egypt's forecast reflects the expectation that its competitiveness might be increased due to the recent depreciation of the Egyptian pound, growth in the services sector (mainly tourism and Suez Canal activity) and construction, which will sustain growth.

Excluding Egypt, other developing oil importers are forecasted to grow at lower levels—at 2.8 per cent for 2023 and 3.1 per cent in 2024.

Despite these challenges, many countries in the region showed resilience amid multiple crises.

In Kenya, growth of economic activity remained solid at 5.2 per cent in 2022, thanks to strengthened manufacturing, improved investor confidence, and a more general improvement in risk appetite.

Côte d'Ivoire's economy grew 6.7 per cent, driven by private consumption, shielded from inflation through increased public wages and public investment. Industry and services were the main engines of growth on the production side.

In the Democratic Republic of Congo, growth accelerated to 8.6 per cent in 2022 from 6.2 per cent in 2021. The mining sector—particularly copper and cobalt—was the main driver of growth due to an expansion in capacity and a recovery in global demand.

Growth in Niger is expected to have jumped by 10.1 percentage points to 11.5 per cent in 2022 on the back of expansion of the agriculture sector after a severe drought that dragged down growth in 2021. Investment in several infrastructure projects, particularly the construction of the oil pipeline and the Kandadji Dam, boosted growth on the demand side.

Namibia's economic activity increased to 3.5 per cent in 2022 from 2.7 per cent in 2021. The growth acceleration occurred due to strong mining—particularly increased production of diamonds, copper, and uranium.

Similarly, economic activity accelerated in Mauritius and Mozambique by 8.3 and 4.1 percentage points, respectively, in 2022.

Growth in Mozambique stemmed from increased coal and aluminium output, thanks to high global demand, high prices, and the start of liquefied natural gas exports to Europe, while Mauritius benefited from the recovery in tourism.

The report urges African policymakers to restore macroeconomic stability, deepen structural reforms to foster inclusive growth, and implement policies that seize the opportunities available during the transition to low-carbon economies.

"Rapid global decarbonisation will bring significant economic opportunities to Africa. Metals and minerals will be needed in larger quantities for low-carbon technologies like batteries and, with the right policies, could boost fiscal revenues," said James Cust, World Bank senior economist.

He added that it would also increase opportunities for regional value chains that create jobs and accelerate economic transformation.

bird story agency

You sweat for your daily bread but still sleep hungry. You pay your bills but still have debts. You vote for change but still see no progress. So, are you living or surviving? Hustlers have their say. #livingorsurviving

WATCH: The latest videos from the Star