Africa’s young population, bustling cities and innovative innovations offer immense growth potential; but to harness that potential fully, productivity must increase significantly.
Africa’s economy is steadily improving, driven by progress toward regional integration and the rebound in key countries, but inflation, debt service costs, and persistent vulnerabilities still present significant barriers to growth.
Economies of Sub-Saharan Africa
Over the past decade, several African nations and companies have become beacons of economic success, offering examples to other economies across Africa to emulate. If policies like these were applied across Africa more broadly, empowering another billion more people and speeding progress towards reaching Sustainable Development Goals faster would become reality.
Overall, Africa’s economic growth remains subdued and uneven. High inflation rates and debt service costs rob resources away from development expenditure, while pandemic infections and weak commodity prices hinder recovery efforts.
Growth has resumed across East African economies, led by tourism-reliant economies and fuel exporters. This recovery is being supported by major economies regaining their footing and ongoing efforts to foster regional integration through the African Continental Free Trade Area. Overall, East Africa is projected to experience 3.6% annualized growth between now and 2018, which represents welcome progress but falls far short of what’s required to address its challenges and reduce poverty in its entirety.
Economies of West Africa
Niger, Cote d’Ivoire, Senegal and Guinea-Bissau can expect their non-resource intensive economies to experience robust performance due to improved agricultural productivity, an upswing in hydrocarbon production and construction activity as well as better policy management. But large private-sector companies must play a greater role in sparking growth on the continent.
Africa’s working-age population is projected to expand rapidly, so effectively deploying labor into high-productivity jobs is essential. Over the past 20 years, services jobs have experienced rapid expansion but real services sector productivity remains one of the lowest worldwide at $7200 per worker.
Increased agricultural production and farmer incomes will be key components of sustainable regional development, while improving infrastructure and creating conducive business environments will open up investment opportunities. Unfortunately, geopolitical tensions and political instability threaten to derail this recovery; domestic demand must also be raised – creating local markets for African products could unlock over $140 billion of additional economic value and increase productivity significantly.
Economies of Central Africa
African’s growth prospects may be improving, yet many challenges still remain on the continent. While inflation is moderating from its pre-COVID-19 pandemic levels, public debt continues to increase while most African governments suffer from limited liquidity and weak balance-of-payment positions.
Africa faces an uphill task when it comes to increasing productivity. Soon home to the largest working-age population and consumer class in the world, Africa needs to increase productivity across services sector and industrial sectors as well as enhance yields in agriculture so as to guarantee food supplies while simultaneously improving smallholder farmers’ incomes.
This report asserts that African nations should seek sustainable growth by building on internal strengths. This can include encouraging economic diversification, strengthening fiscal positions and investing in key development sectors; while long-term affordable financing solutions should also be made available so as to avoid debt financing or dependence on volatile commodity markets.
Economies of East Africa
Africa possesses enormous assets: home to the world’s highest working age population and an expanding consumer class, along with rich forests, wildlife populations, oil reserves and minerals which remain underutilized in many of its nations.
Most Africans depend on economic growth as their only path out of poverty; however, multiple factors — weaker global demand, higher borrowing costs, and rising commodity prices — are thwarting its full recovery after pandemic outbreaks.
Even amid these challenges, some African countries and cities are shining examples of productivity and growth, providing models for other parts of Africa to follow. Their examples serve as models for others across Africa to follow; yet more needs to be done if we are going to see living standards improve substantially and one billion people cross over into empowerment by 2022. Growth acceleration, trust-building measures and improving investment conditions would allow Africa to reclaim its place as a provider of value globally while being leading partners for innovation.