African Export-Import Bank (Afreximbank) cites debt among the major setbacks preventing Africa from achieving its potential.
In its latest report titled ‘A Resilient Africa: Delivering Growth in a Turbulent World’, the lender says African economies face several downside risks, including increasing levels of sovereign debt, associated sustainability risks, and excessive exposure to adverse terms-of-trade shocks.
Other risks include escalating geopolitical tensions in some cases, volatile domestic political environments in certain African countries, high commodity prices and inflationary pressures, and potential food insecurity.
The report, that analyses the economic environment, trade patterns, debt scenarios, and future projections for African economies, shows that the continents economies will grow on average by 3.8 percent in 2024 slightly outpacing the predicted global growth of 3.2 percent.
According to the report, the growth is expected to maintain the upward curve reaching four percent in 2025.
Afreximbank group chief economist and managing director Yemi Kale said ongoing global challenges undermined the performance of Africa’s trade, decreasing it by 6.3 percent in 2023, down from 15.9 percent in 2022.
However, intra-African trade expanded by 3.2 percent over the same period, Kale noted.
“This performance is reflective of the resilience of the African economy and the potential impact of the African Continental Free Trade Area’s (AfCFTA) single market for the continent as a tool to protect them from global shocks,” Kale said.
“Our analysis in the report also revealed large untapped potential in intra-African trade, especially in machinery, electricity, motor vehicles, and food products,” he continued.
The outlook for the African Continent in 2024 remains positive despite the challenging economic environment of 2023, with most macroeconomic indicators expected to improve in 2024 and 2025.
Furthermore, growth across Africa is projected to exceed the global average.
Inflation, though currently high, is expected to trend downward over the coming two years.
