The African Development Bank (AfDB) has said that Nigeria and other economies of Africa are projected to grow by 4.1 per cent in 2023 and 4.3 per cent in 2024.
The AfDB President, Dr Akinwumi Adesina disclosed this while inaugurating the African Economic Outlook (AEO) 2023 at the ongoing 2023 African Development Bank Annual Meetings in Sharm El Sheikh.
According to the AfDB President, the economies on the continent have shown remarkable resilience in spite of the multiple challenges they faced.
He said, “These multiple and dynamic shocks have weighed on Africa’s growth momentum, with growth in real Gross Domestic Product (GDP) estimated at 3.8 per cent in 2022.
“This is down from 4.8 per cent in 2021. The GDP growth in 2022 is above the global average of 3.4 per cent.
“Africa has also shown remarkable resilience, evident in the projected consolidation of economic growth in the medium term.
“The outlook remains positive and stable, with a projected rebound to four per cent in 2023 and further consolidation to 4.3 per cent in 2024.
The AfDB boss attributed the slowed growth on the continent to the tightening global financial conditions and supply chain disruptions exacerbated by Russia’s invasion of Ukraine, which subdued global growth.
He said growth was also disrupted by the residual effects of the COVID-19 pandemic and the growing impact of climate change and extreme weather events.
He also stated that the continent also had an important human capital base, with its population projected to increase to 2.4 billion by 2050.
“As most of the current population is young, compared with other regions’ ageing populations, Africa is the current and future frontier market in green growth opportunities.
“Africa hosts 25 per cent of the world’s natural biodiversity and 30 per cent of the world’s mineral resources, most of which will be essential for a green transition.
“Africa has a large renewable energy potential including wind, solar, hydropower and geothermal and the world’s highest solar energy potential.
“Countries in the continent also have the greatest potential for investments in green infrastructure and technology.
He said this was due to their low levels of development, low legacy high-emissions infrastructure, and low frequency of infrastructure and project finance default rates, estimated at 5.5 per cent.
Also, the AfDB Vice President for Economic Governance and Knowledge, Prof Kelvin Urama, said the deceleration was broad-based, with 31 of the 54 African countries posting weaker growth rates in 2022 relative to 2021.
Urama said the continent, performed better than most world regions in 2022.
He said the continent’s resilience projected to put five of the six pre-pandemic top-performing economies, Benin, Côte d’Ivoire, Ethiopia, Rwanda, and Tanzania, back in the league of the world’s 10 fastest-growing economies in 2023-24.
“Growth is projected to rebound to four per cent in 2023 and consolidate at 4.3 per cent in 2024, underpinning Africa’s continued resilience to shocks.
” In spite of this, climate change, elevated global inflation, and persistent fragilities in supply chains will remain on the watchlist as potential factors for possible slowdowns of growth in the continent,” he said.
Urama said while most African currencies weakened, others appreciated or remained stable.
According to him, countries with appreciating currencies include Angola (27.1 per cent), Seychelles (15.6 per cent), and Zambia (15.3 per cent).
Urama said depreciation rates could ease in 2023 and 2024, but continued strengthening of the U.S. dollar would keep African currencies under pressure.
He said currency weaknesses in some of Africa’s more globally integrated economies (Kenya, Nigeria, and South Africa) are expected to persist in 2023.
“This is largely due to potential capital outflows as investors search for safe assets in advanced economies.”
“Public debt is projected to remain high, with lingering vulnerabilities.
“Although the median public debt in Africa is estimated to have declined to 65 per cent of GDP in 2022 from 68 per cent in 2021.
“Thanks to debt relief initiatives in some countries, it will remain above the pre-pandemic level of 61 per cent of GDP.
The economist said this debt-GDP ratio was expected to increase to 66 per cent in 2023 and then to stabilise at around 65 per cent in 2024.
“In addition, many countries’ difficulties in accessing international capital markets, combined with limited revenue mobilisation, have led them to issue local currency debt.
“The debt increased substantially from 35 per cent of GDP on average in 2019 to 42 per cent in 2021
“. Domestic debt restructuring, therefore, should be part of the negotiations for the resolution of public debt crises in countries facing heightened risks,” the vice president said.