African economies remain resilient despite experiencing multiple shocks, with 53 out of 54 African countries seen maintaining positive growth and a stable outlook for the 2023/24 period, the African Development Bank has projected.
Prof. Kevin Urama, Acting Chief Economist and Vice President for Economic Governance and Knowledge Management at the bank, said that with Africa’s abundant natural capital, massive youthful population and its growing economy, there is a huge opportunity for low-income economies to rebound after shocks such as the Covid-19 pandemic.
Urama spoke at the launch of the International Monetary Fund’s Macroeconomic Developments and Prospects in Low-Income Countries – 2022 Report(link is external) on 31 January in Abidjan, Côte d’Ivoire. “The beautiful news is that Africa’s five fastest-growing economies are set to re-join the ten fastest-growing economies around the world in the coming years,” he said.
He said many low-income countries are in Africa and noted that the IMF report comes at an opportune time, especially as most of these economies are grappling with complex domestic and external economic shocks.
“These shocks are threatening the recovery and momentum we have seen from countries trying to make a comeback after the ravaging effects of Covid-19 and also what Russia’s invasion of Ukraine is creating in the global economy,” Urama said.
He explained that the overlapping shocks are disrupting Africa’s and global supply chains and fuelling widespread energy and food price inflation.
The prevailing global financial conditions, domestic debt service costs and the lingering effects of the Covid-19 pandemic are all creating significant headwinds that African countries must navigate. Inflation is accelerating rapidly, with food and commodity prices continuing to rise, heightening food insecurity and raising the risk of social unrest in low-income countries, including in Africa.
Citing World Food Programme data, Urama said over 345 million people in 82 countries globally are today suffering from acute food insecurity, and there is a need to increase access to food, energy and facilities that can help address some of these challenges.
“In Africa, last year, our own estimate is that over 15 million more people were driven into extreme poverty due to high energy prices and food pricing inflation,” he said.
He said the African Development Bank’s 2023 Africa’s Macro-Economic Performance and Outlook report, which launched on 19 January, shows that these inflationary trends could ease in 2023-2024, giving some cautious optimism for the continent’s outlook.
African and middle-income countries will face significant challenges in 2023 going forward, Urama warned.
Roland Kangni Kpodar, International Monetary Fund Deputy Division Chief for Strategy, Policy and Review, presented the IMF report. He said the Covid-19 pandemic had impacted low-income countries disproportionately.
“Despite the low number of [Covid-19] identified cases, the health systems in low-income countries had been severely affected by the pandemic because they were already fragile even before the pandemic,” Kpodar said.
On top of health impacts, Kpodar said that loss of learning hours due to school closures created a setback to human capital development in these countries.
The enormous adverse impact of the pandemic on the economies of low-income countries revealed not only the limited policy space they had even before the pandemic but also the high structural vulnerability to such shocks, he added.
“Within countries, inequality has also increased given that most disadvantaged groups, including women and those in the informal economy, suffered the most from the economic fallout of the pandemic,” said Kpodar.