Africa set to  be  second-fastest growing region after Asia with 4.3% GDP growth in 2024, says AfDB

By Cynthia Ezekwe 

The African Development Bank (AfDB) forecasts that Africa will consolidate its post-Covid-19 pandemic recovery to 4.3 per cent gross domestic product (GDP) growth in 2024 from 3.8 per cent  in 2022 to become the second-fastest growing region in the world after Asia in 2023-24.

The continent’s premier development finance institution made the prediction in its recently launched 2023 African Economic Outlook report, where it noted that the growth will depend on global conditions and the continent’s ability to bolster its economic resilience. This is as the continent keeps demonstrating  the resilience of its economy despite dealing with multiple global shocks.

The launch, attended by African leaders, experts and development partners, was one of the highlights of AfDB’s annual meetings in Sharm El Sheikh, Egypt, tagged “Mobilising Private Sector Financing for Climate and Green Growth.’’

Kevin Urama, the development bank’s chief economist and vice president for economic governance and knowledge management, presented the report’s findings, outlining several potential policy actions for stimulating more private sector financing for climate and green growth in Africa.

AfDB recommended robust policy actions, including incentivizing green industries and providing guarantees at scale to de-risk private sector investments in managing natural capital across the continent.

Urama outlined other options to include tapping into the expanding global and domestic private equity and venture capital appetite for African markets and cautiously engaging with the emerging carbon markets and debt-for-climate swaps.

Commenting on the report, Akinwumi Adesina, African Development Bank Group president stressed that  African countries must do more, including mobilising more domestic resources and restructuring debt to withstand global headwinds.

Adesina stated that African economies are moving in the right direction, noting that five of the six pre-pandemic top-performing economies are set to be back in the league of the world’s 10 fastest-growing economies in 2023–2024.

“But as we gather today, the world is facing multiple challenges, including climate change, inflation driven by higher prices of energy, commodities, and disruption of supply chains due to the ongoing Russia-Ukraine war,” he said.

The bank chief also pointed out that monetary tightening in the United States and Europe has led to rising interest rates that have compounded debt service payments for African countries.

During a panel discussion on the report, Andrew Mitchell,  UK’s Minister of State and African Development Bank Group, called for a review of the global financing architecture to unlock more green investments in developing countries, particularly Africa.

He mentioned some of the Uk’s  support to the continent, including providing guarantees through regional multilateral financial institutions such as the African Development Bank.

Mitchell commended the AfDB’s leadership role in rallying global partners to mobilise financing at scale to tackle cross-cutting issues and improve capital wealth management, noting that lots of ideas are coming from the African Development Bank to grow partnerships to mobilise financing.

Also commenting on the report, Admassu Tadesse, president and group managing director of Eastern and Southern trade and Development Bank, said he found the report’s focus on the scope to leverage natural capital., while noting that the report is timely.

Additionally,  Hassan Abdallah, acting Egypt’s central bank governor,  called for a balance in the mix of innovation and long-term credit for green initiatives.

On  his part, Heike Harmgart, managing director for Southern and Eastern Mediterranean region, European Bank for reconstruction and development, mentioned a recent approval by shareholders of the Bank to expand development assistance to sub-Saharan Africa.

“We are keen to support green growth, working with our partners. We want to see how we can work with the African Development Bank to accelerate growth in Africa,’’ Harmgart said.

Christophe Bories, deputy director of Multilateral Financial Affairs and Treasury Development in France, also commended the report, stating that it clearly shows the strengths and weaknesses of African economies, and will enable  policymakers to make the right decisions.

The African Economic Outlook report is the group’s flagship annual publication that provides compelling, up-to-date evidence and analysis to inform policy decisions.

While highlighting the challenges, the 2023 African Economic Outlook mainly focuses on opportunities to unlock private investments and know-how and tap the continent’s vast natural capital to combat climate change and spur the transition to green growth.