The African Development Bank (AfDB) has released its African Economic Outlook (AEO) for 2023, projecting a positive growth trajectory for Nigeria and other economies on the continent. According to the AfDB President, Dr Akinwumi Adesina, Africa is expected to experience a growth rate of 4.1% in 2023, followed by a further increase to 4.3% in 2024.
Speaking at the inauguration of the AEO 2023 during the ongoing AfDB Annual Meetings in Sharm El Sheikh, Dr Adesina highlighted the remarkable resilience demonstrated by African economies despite facing multiple and dynamic shocks. He noted that Africa’s real Gross Domestic Product (GDP) growth had slowed to an estimated 3.8% in 2022, down from 4.8% in 2021. Nevertheless, this growth rate surpasses the global average of 3.4%.
The AfDB president attributed the deceleration in growth to tightening global financial conditions, supply chain disruptions exacerbated by Russia’s invasion of Ukraine, residual effects of the COVID-19 pandemic, and the growing impact of climate change and extreme weather events. Despite these challenges, Dr Adesina emphasized Africa’s potential to pursue green growth and climate objectives to accelerate economic development.
Africa boasts some of the world’s fastest-growing economies and is projected to surpass the global average in real GDP growth between 2023 and 2024. Furthermore, with its young population, the continent is seen as a current and future frontier market for green growth opportunities. It hosts 25% of the world’s natural biodiversity, 30% of mineral resources, and possesses vast renewable energy potential.
Dr Adesina highlighted the continent’s potential for investments in green infrastructure and technology due to its low levels of development, low-emissions infrastructure, and low frequency of infrastructure and project finance default rates. He also emphasized the importance of Africa’s human capital base, with the projected population expected to reach 2.4 billion by 2050.
Professor Kelvin Urama, the AfDB Vice President for Economic Governance and Knowledge, noted that while Africa experienced a broad-based deceleration in growth in 2022, it still outperformed most world regions. He mentioned that Africa’s resilience is projected to restore five of the six pre-pandemic top-performing economies (Benin, Côte d’Ivoire, Ethiopia, Rwanda, and Tanzania) to the list of the world’s 10 fastest-growing economies in 2023-24.
However, Urama cautioned that climate change, elevated global inflation, and persistent fragilities in supply chains remain on the watchlist as potential factors that could slow down growth on the continent.
AfDB Report Addresses Performances Of African Currencies
The report also addressed the performance of African currencies, with some weakening and others appreciating or remaining stable. Angola, Seychelles, and Zambia were among the countries experiencing appreciating currencies. While depreciation rates are expected to ease in 2023 and 2024, the continued strengthening of the U.S. dollar could keep African currencies under pressure.
Concerns were also raised regarding public debt, which is projected to remain high, although it declined slightly to 65% of GDP in 2022 from 68% in 2021. The debt-to-GDP ratio is expected to increase to 66% in 2023 and stabilize around 65% in 2024. Factors contributing to this increase include rising food and energy import bills, high debt service costs, exchange rate depreciations, and rollover risks. The vice-president highlighted the need for domestic debt restructuring as part of the resolution of public debt crises in countries facing heightened risks.
The AfDB’s annual meetings, which commenced on May 22, will conclude on Friday. The theme of this year’s meetings is “Mobilizing Private Sector Financing for Climate and Green Growth in Africa,” providing a platform for Bank Group Governors, representatives from development agencies, academics, civil society, and the private sector to discuss experiences and strategies to bridge the climate financing gap and promote the transition to green growth in Africa.
The annual meetings serve as a significant event for the Bank Group, attracting around 3,000 participants and facilitating crucial discussions on Africa’s economic development and future prospects.
