Presenting the report, African Development Bank Chief Economist and Vice President Kevin Urama noted that African economies could benefit from higher demand for its goods as countries seek alternatives for food and energy in response to disruptions caused by the war in Ukraine. Urama urged African countries to strive for higher growth rates, more inclusive economies and greater resilience to external shocks.
As the global economy faces increasing uncertainty, the projected stable outlook for 2023-2024 reflects continued policy support in Africa and global efforts to mitigate the impact of external shocks. The new publication, which will be released in the first and third quarters of each year, provides African policymakers, global and domestic investors, researchers and other development partners with an up-to-date, evidence-based assessment of the continent’s latest macroeconomics. Performance and Short-Medium-Term Outlook Amidst Dynamic Global Economic Developments.
However, African countries face unfavorable global conditions, including rising inflation, high debt servicing costs and the risk of debt distress. Urama noted that tightening economic conditions and the appreciation of the US dollar have had dire consequences for most African economies, making it difficult for African countries to access international capital markets for new financing.
Most African currencies, especially in commodity-exporting countries, lost substantial value against the dollar in 2022 due to monetary policy tightening in the United States. Attrition rates range from 21% in Malawi to 69% in South Sudan. Urama warned that currency weaknesses in Africa’s more globally integrated economies, such as Algeria, Kenya, Nigeria and South Africa, could persist into 2023.
The report highlights other economic headwinds, including the effects of COVID-19 policy responses, rising geopolitical tensions, and the spillover effects of Russia’s invasion of Ukraine. These conditions are pushing price stability beyond the grasp of most central banks.
Urama urged bold policy measures to bridge the significant financing gap in Africa, saying, “It is imperative to implement policies that mobilize and leverage private finance for development in Africa.” African countries’ fiscal positions have already been stretched by COVID-19 policy responses and support for vulnerable populations against rising food and energy prices amid high debt and climate change impacts.
The African Development Bank Group’s report provides valuable insights into the current state of African economies and underscores the need for strategic policy measures to address challenges and seize opportunities for growth and development.
