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The headwinds of Africa

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The headwinds of Africa
Despite good growth in some regions, several headwinds are lashing parts of Sub-Saharan Africa, which is hampering potential economic growth across the continent. Image credit: Leon Louw for WhyAfrica

The headwinds of Africa

Although economies are recovering, increased conflict in West Africa and climatic shocks are hampering growth.

By Leon Louw, owner of WhyAfrica and editor of the WhyAfrica magazine

According to the April issue of the World Bank’s “Africa’s Pulse” report, economic growth in Sub-Saharan Africa is expected increase to 3.4% this year, and 3.8% in 2025. This is after growth in Sub-Saharan Africa bottomed out at 2.6% in 2023.

The report states that this “recovery is primarily driven by greater private consumption growth as declining inflation boosts the purchasing power of household incomes.

“Investment growth will be subdued as interest rates are likely to remain high while fiscal consolidation constrains government consumption growth.

“The contribution of the global economy to Africa’s growth will remain modest. Expectations of monetary policy rate cuts in large global economies may stimulate investment growth in 2025.”

The headwinds of Africa

Despite this positive news and renewed optimism in some regions, as WhyAfrica discussed on our 2024 Hawks Eye Report (available for purchase on the WhyAfrica online shop) there are several risks to keep an eye on in 2024.

Two of the most worrying factors are the uptick in violent attacks and increased conflict in West Africa, and the havoc and chaos caused across the continent by extreme weather and climate shocks.

According to the World Bank, increased conflict and violence in the region will continue to weigh on economic activity.

“Although confined to small economies so far, military coups and the risk of coup contagion significantly impact international investor sentiment and the perception of risk toward the entire region,” says the World Bank in the Africa’s Pulse report.

Tensions in West Africa have escalated with the decisions of Burkina Faso, Mali, and Niger to leave the Economic Community of West African States and Senegal’s decision earlier this year to delay elections.

In Sudan, the resolution of the conflict between the Sudanese Armed Forces and the Rapid Support Forces through mediation may prove difficult while in Ethiopia, security remains uncertain as bouts of violence continue in the Amhara and Oromia regions.

Persistent conflict and organised violence may disrupt production and access to food staples in several countries (Burkina Faso, Mali, Niger, and Somalia, among others).

Questions about food security (The headwinds of Africa)

The World Bank states further that food security problems are amplified by climatic shocks—as frequent droughts and floods are lashing Eastern and Southern Africa (Ethiopia, Kenya, Mozambique, Somalia, and Zambia).

“Disruptions of rainfall patterns, along with the black pod disease, are threatening cocoa production and the livelihoods of farmers in Côte d’Ivoire and Ghana.

“Moreover, factors like soil degradation, pests, and market fluctuations exacerbate the difficulties faced by agricultural communities.

“With an estimated 105 million people in the region potentially experiencing severe food insecurity as of March 2024, urgent and comprehensive agricultural interventions and support are imperative.”

A growth divergence (The headwinds of Africa)

An important point to note is the growth divergence between non-resource abundant and resource abundant countries.

According to the Word Bank growth will rebound in 2024 for both groups and continue to accelerate in 2025–26.

“Declining international commodity prices from their 2022 peaks are expected to weigh on exports for resource abundant countries. Still, this group of countries will grow from 2.2% in 2023 to 2.8% in 2024 as hydrocarbon projects resume or come online in Niger and Senegal and mining production kicks off in the Democratic Republic of Congo (DRC), Mali, and Sierra Leone.

“Growth in non-resource abundant countries is supported by gross fixed investment and private consumption, and these countries are expected to grow from 2.4% in 2023 to 3.4% in 2024, and further increase to 4% in 2025–26.”

Thus, the more diversified economies in the region are expected to grow faster than those reliant purely on the export of natural resources.

Fastest growing economies (The headwinds of Africa)

The expected growth performance across the region makes for interesting reading: 32 of 47 countries in Sub-Saharan Africa are expected to experience a growth acceleration in 2024—with eight of these 32 countries posting a rate of growth greater than 5% this year.

The countries with the fastest rebound in 2024 include Niger (5.7 percentage points), Senegal (3.4 percentage points), São Tomé and Príncipe (2.9 percentage points), Angola (1.9 percentage points), and the Republic of Congo (1.6 percentage points).

At the other end, 15 countries are expected to record a growth slowdown in 2024, with the sharpest decelerations in Guinea (2.2 percentage points), Zimbabwe (2.2. percentage points), Mauritius (2.2 percentage points), and the DRC (1.8 percentage points).

The headwinds of Africa

The headwinds of Africa
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AgricultureEnvironmental Management & Climate ChangeEnergyESGInfrastructureMiningPolitical EconomyTourism and ConservationWater Management