In the recently launched 2023 African Economic Outlook report by the African Development Bank (AfDB), it has been projected that Africa will be the second-fastest growing region globally in 2023-2024, following Asia. Despite facing multiple global shocks, the continent’s economy has demonstrated resilience. However, the projected growth is contingent upon global conditions and Africa’s ability to enhance its economic resilience, as highlighted by the report.
According to the report, Africa is expected to consolidate its post-Covid-19 pandemic recovery, with a forecasted GDP growth of 4.3% in 2024 compared to 3.8% in 2022. Notably, 22 countries are anticipated to achieve growth rates above 5%. To ensure sustained growth, the report recommends implementing robust policy actions, including the promotion of green industries and providing extensive guarantees to mitigate risks for private sector investments related to managing natural capital across the continent.
The launch of the report took place during the African Development Bank Group’s Annual Meetings in Sharm El Sheikh, Egypt, with the theme “Mobilizing Private Sector Financing for Climate and Green Growth.” The event was attended by African leaders, experts, and development partners. During the presentation of the report’s findings, Prof. Kevin Urama, the Bank Group’s Chief Economist and Vice President for Economic Governance and Knowledge Management, outlined various potential policy actions to stimulate private sector financing for climate and green growth in Africa.
These proposed actions include leveraging the growing interest of global and domestic private equity and venture capital in African markets, as well as cautiously engaging with emerging carbon markets and debt-for-climate swaps. The report, spanning 220 pages, was unveiled by Akinwumi Adesina, the President of the African Development Bank Group. Adesina emphasized the importance of African countries mobilizing more domestic resources and restructuring debt to withstand global challenges.
While acknowledging that African economies are heading in the right direction, Adesina highlighted the multiple challenges faced by the world, such as climate change, inflation resulting from higher energy and commodity prices, and disruptions in supply chains due to the Russia-Ukraine conflict. Additionally, he noted that monetary tightening in the United States and Europe has led to increased interest rates, compounding debt service payments for African nations.
During a panel discussion on the report, Andrew Mitchell, the UK’s Minister of State and African Development Bank Group Governor, called for a review of the global financing architecture to unlock more green investments in developing countries, particularly in Africa. Mitchell praised the African Development Bank’s leadership role in mobilizing financing at a significant scale to address cross-cutting issues and improve capital wealth management. He expressed support for the Bank’s initiatives aimed at fostering partnerships and mobilizing financing.
Other participants in the discussion, including Admassu Tadesse, President and Group Managing Director of Eastern and Southern Trade and Development Bank, and Hassan Abdallah, Acting Egypt’s central bank governor, emphasized the importance of leveraging natural capital and striking a balance between innovation and long-term credit for green initiatives. Dr. Heike Harmgart, Managing Director for the Southern and Eastern Mediterranean region at the European Bank for Reconstruction and Development, mentioned the bank’s recent approval to expand development assistance to sub-Saharan Africa and expressed a willingness to collaborate with the African Development Bank to accelerate growth in Africa.
Christophe Bories, Deputy Director of Multilateral Financial Affairs and Treasury Development in France, commended the report for its comprehensive analysis of the strengths and weaknesses of African economies, stating that it provides policymakers with valuable insights for making informed decisions.
The African Economic Outlook report is a flagship annual publication of the African Development Bank Group, offering updated evidence and analysis to inform policy decisions. While addressing the challenges faced, the 2023 report primarily focuses on opportunities to unlock private investments and tap into Africa’s abundant natural capital to combat climate change and promote the transition to green growth.