The African Development Bank biannual report has shown that Rwanda’s economy is projected to grow at 7.8 percent in 2023 and 8.1 percent in 2024 among five pre-Covid-19 best performing economies on the continent.
The report (Africa’s Macroeconomic Performance and Outlook) released in Abidjan, Côte d’Ivoire on January 19, shows that the average growth of real GDP in Africa slowed to 3.8% in 2022, from 4.8% in 2021 amid significant challenges following the Covid-19 shock and Russia – Ukraine war.
Despite this slowdown, 53 Africa’s countries posted positive growth and all the five regions of the continent remain resilient with a steady outlook for the medium-term.
The report’s pre-Covid-19 top five performing economies are projected to grow by more than 5.5% on average in 2023-2024 and to reclaim their position among the world’s 10 fastest-growing economies. These countries are Rwanda (7.9%), Côte d’Ivoire (7.1%), Benin (6.4%), Ethiopia (6.0%), and Tanzania (5.6%).
Africa is set to outperform the rest of the world in economic growth over the next two years, with real gross domestic product (GDP) averaging around 4% in 2023 and 2024- higher than projected global averages of 2.7% and 3.2%.
“Despite the confluence of multiple shocks, growth across all five African regions was positive in 2022—and the outlook for 2023–24 is projected to be stable,” said AfDB Group President, Dr. Akinwumi Adesina.
However, the report cautioned on the outlook following current global and regional risks calling for bold policy actions at national, regional, and global scales to help African economies mitigate the compounding risks.
These risks include: soaring food and energy prices, tightening global financial conditions, and the associated increase in domestic debt service costs.
The other equally challenging threat, the report said, is Climate Change—with its damaging impact on domestic food supply and the potential risk of policy reversal in countries holding elections in 2023—poses a risk.
To mitigate these compounding risks, the report asked for bold policy actions and robust measures to help African economies mitigate the risks through a mix of monetary, fiscal, and structural policies.
These include: Timely and aggressive monetary policy tightening in countries with acute inflation, and cautious policy tightening in countries where inflationary pressures are low, enhancing resilience by boosting intra-Africa trade, especially in manufacturing products to cushion economies from volatile commodity prices.
Other measures seek to accelerate structural reforms to build tax administration capacity and investments in digitalization and e-governance, improving institutional governance and enacting policies and taking decisive action to reduce structural budget deficits and the accumulation of public debt.
Economist Jeffrey Sachs, who is the advocate of the United Nations Secretary-General for Sustainable Development Goals and Director of the Center for Sustainable Development at Columbia University commended the report which he said showed that African economies are growing and growing consistently.
Sachs said: “Africa can and will rise to growth of 7 percent or more per year consistently in the coming decades. What we’ll see, building on the resiliency we see in this report, is a real acceleration of Africa’s sustainable development so that Africa will be the fast-growing part of the world economy. Africa is the place to invest.”