African countries are predicted to dominate the world’s top 10 highest growing economies in 2024, according to a report on Recent Economic and Social Developments in Africa by the Economic Commission for Africa (ECA).
The most notable growth drivers in Africa in 2024 will be Niger, Senegal, Ivory Coast, DRC and Rwanda. Adam Elhiraika, Director, Macroeconomics and Governance Division at ECA said Africa was the fastest growing region after East and South Asia in the developing world in 2023, and Africa will continue this trend in 2024 and 2025.
The report says that Niger and Senegal are expected to experience significant economic growth due to the increase in hydrocarbon production and exports.
Growth in Niger will be fuelled by the revival of agricultural production – although it is vulnerable to unfavourable weather conditions – and a rise in crude oil production, which will have a beneficial impact on the transportation sector. However, recent military coups in, together with sanctions from regional blocs, have disrupted economic activity and incurred significant social costs.
The growth in Senegal will be driven by rising private and infrastructure projects, however, residents in up to 15 African nations are participating in elections this year, including the recently concluded presidential elections in Senegal, which could impact the short-term growth and development.
“Ivory Coast, DRC and Rwanda – The robust expansion in these nations is attributed to an increase in infrastructure investment, continuous development in tourism, good performance of the mining industry, and advantages of economic diversification,” said Mr. Elhiraika.
Growth in the DRC will be fuelled by the extractive sector due to the opening of new oilfields, as well as by agriculture, services, and mining, in accordance with the national strategy to boost social and investment expenditures.
Rwanda’s growth will be fuelled by private consumption and investment, while Ivory Coast’s growth is driven by increased investment stemming from pro-competitive market reforms and business environment improvements in the National Development Plan, alongside private consumption influenced by decreasing inflation.
The report shows that the continent is expected to grow from 2.8% in 2023 to 3.5% in 2024 and reaching 4.1% in 2025, mainly underpinned by net exports, private consumption and gross fixed investment.
Africa’s economic growth remains unstable and lower than potential, and the rate required for achieving the Sustainable Development Goals (SDGs) and Agenda 2063 target, necessitating major fiscal and monetary policy shifts as well as increased efforts to address internal and external balances, inflation and debt issues.
In 2023, the report says, the global economy showed resilience with declining energy and food prices, increased consumption in China, and improved US economic growth. Still, the outlook remains uncertain, with high debt, rising borrowing costs, weak global trade, and mounting geopolitical risks, constraining progress towards the SDGs and Agenda 2063 targets.
“The region faces threats of tighter monetary and fiscal conditions, and notable debt sustainability risks,” noted Mr. Elhiraika adding that the ongoing climate catastrophes and extreme weather occurrences will continue to negatively impact agriculture and tourism, while geopolitical instability will continue to affect certain subregions in Africa.
Trade in Africa continues to face headwinds reflected in net capital outflows and subdued export revenues, with intra-African trade remaining relatively low. Africa’s total exports are largely concentrated in extractive commodities, which has kept Africa trapped at low points along critical value chains.
Social development trends in Africa are concerning, with rising poverty, inequality, and unemployment exacerbating the continent’s challenges to achieve the SDGs.
The ECA report notes that the capacity of African countries to effectively tackle poverty and inequality is severely constrained by the low poverty-reducing effect of economic growth.
The key recommendations in the report include:
To revitalize trade in Africa, it is necessary to reduce trade costs in Africa. The implementation of the AfCFTA is vital to boost trade, eliminate barriers, and promote other trade liberating strategies.
To achieve the Sustainable Development Goals (SDGs), it is necessary to mobilize more domestic resources and introduce innovative finance mechanisms through capacity building, institutional strengthening, and promotion of (tax) reforms; use digital technology; introduce environmental taxation; implement innovative finance mechanisms, such as debt swaps.
With the increasing number of countries in or at risk of debt distress, sustainable debt relief and restructuring measures are required.
Countries should implement structural reforms to help to revive growth and bolster resilience and to enhance the effectiveness of fiscal and monetary policies to contain inflation.
African countries should also capitalize on the current global shifts, including the transition towards renewable energy and the revitalized significance of critical minerals.