African Trade

and Economic
Outlook 2025
African Resilience in a
Changing World Order

Transforming Africa’s Trade

African Export-Import Bank
Banque Africaine d’Import-Export

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 © Copyright Afreximbank, Cairo 2025. All rights reserved.
No part of this publication may be reproduced or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording or otherwise or stored in any
retrieval system of any nature without the prior, written permission of the African
Export-Import Bank, application for which shall be made to the Bank.

ISBN 978-92-95097-62-9

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 Foreword

Africa’s economic resilience remains under pressure from an increasingly uncertain global
environment. Over the past few years, the continent has navigated a complex landscape marked by
global inflationary pressures and associated tightening financial conditions, geopolitical conflicts,
supply chain disruptions, and the escalating effects of climate change. While these challenges
have created significant economic headwinds, Africa has demonstrated remarkable adaptability
and strength. The continent’s resilience has been underpinned by a combination of several factors
including ongoing structural reforms, robust domestic consumption, increasing regional trade
integration, and growing participation in the global digital economy.
The 2025 African Trade and Economic Outlook (ATEO) provides an in-depth analysis of Africa’s
economic and trade performance, projecting the continent’s growth trajectory in the short-to-
medium term. The report highlights the key macroeconomic and trade developments shaping Africa’s
recovery, detailing opportunities for sustainable growth amid heightening global and domestic
uncertainties. Notably, despite global economic fragility, Afreximbank Research projects Africa’s
real GDP to grow by 4.0% in 2025, reaching 4.1% in 2026 and 4.2% in 2027. Encouragingly, 41% of
African economies are expected to grow at rates of 5% or higher, nearly double the global average,
reflecting the continent’s expanding role as a driver of global growth.
Trade remains a central pillar of Africa’s economic transformation. The continued implementation
of the African Continental Free Trade Area (AfCFTA) has significantly boosted intra-African trade,
encouraging regional integration and contributing to diversifying the continent’s export basket and
destination thereby reducing its reliance on external markets. In 2024, intra-African trade increased
by 7.7%, reflecting the growing effectiveness of regional trade policies and improvements in trade-
carrying infrastructure. However, despite these gains, Africa’s trade landscape remains vulnerable
to global price volatility and external shocks, underscoring the need to accelerate industrialization,
value-added production, and economic diversification. By shifting away from commodity dependence
and investing in manufacturing and services, Africa can enhance its trade resilience and create new
opportunities for long-term, sustainable growth.
While Africa’s economic outlook remains broadly positive, the balance of risks continues to tilt toward
the downside. The ongoing volatility in global commodity markets, persistent fiscal and external
imbalances, and the risk of debt distress in several African economies pose potential challenges.
Geopolitical tensions and economic slowdowns in major economies, such as the United States
and China, could also impact global trade flows and investment inflows into Africa. Furthermore,
climate-related disruptions, including droughts, floods, and extreme weather conditions, threaten
food security, infrastructure development, and economic stability across the continent. These risks
underscore the need for proactive policies and coordinated regional strategies to build resilience and
mitigate external vulnerabilities.
To sustain and accelerate Africa’s growth momentum, policymakers must focus on structural
transformation, economic diversification, and strengthening macroeconomic stability. Enhancing
debt sustainability, improving fiscal management, and promoting investment in critical infrastructure
will be key to ensuring long-term economic resilience. Additionally, investing in human capital
development, particularly in education, healthcare, and digital skills, will be essential to unlocking
Africa’s full economic potential and fostering inclusive growth. The expansion of trade financing
mechanisms, the development of regional value chains, and the deepening of financial markets will
also play a crucial role in boosting private sector growth and supporting the continent’s economic
ambitions.
At Afreximbank, we recognize that research is a cornerstone of Africa’s development, providing
the data-driven insights needed to shape effective policies, drive investment, and unlock new
opportunities for sustainable growth. We hope that this report, produced by Afreximbank Research,
will contribute to these efforts by equipping policymakers, investors, development institutions,
and other stakeholders with critical analysis to navigate Africa’s evolving economic landscape. By
leveraging the insights presented in this publication, we can collectively work toward building a
more integrated, resilient, and prosperous Africa—one that is well-positioned to overcome global
challenges and seize the opportunities of the future.

Dr. Yemi Kale

Group Chief Economist and Managing Director, Research Afreximbank

I
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 Acknowledgments

The African Trade and Economic Outlook (ATEO) 2025 was prepared by the Research Division
under the overall leadership and supervision of Dr. Oyeyemi Kale, Afreximbank Group Chief
Economist and Managing Director of Research.
The report writing team comprising Afreximbank researchers and external consultants - Prof.
Blaise Gnimassoun (University of Lorraine, University Paris Nanterre, France) and Prof. Dramane
Coulibaly (University Lumière, Lyon) was led by Dr. Sampawende Jules Tapsoba, Deputy Chief
Economist and Director of Data Management and Model Development – whose leadership,
analytical rigor, and coordination were instrumental in the successful completion of this report.
The Report benefitted from extensive review and constructive feedback from Dr. Anthony
Kyereboah-Coleman, Director of Development Research, and Dr. Raymond Boumbouya, Director
of Trade and Commodity Research, Ms. Lizanne Case, Director of Trade Intelligence Solutions, and
the third cohort of the Bank’s sabbatical researchers, Professors Alemayehu Geda, Matthew Kofi
Ocran, and Michael Graham, as well as other members of the Research Division.
Finally, we extend our profound appreciation to Mr. Dennys Denya, Senior Executive Vice
President of Afreximbank, and the Bank’s Executive responsible for research, as well as Prof.
Benedict Oramah, President and Chairman of the Board of Afreximbank, for their steadfast
support of the Research Division. Their commitment to building a strong research and knowledge
culture within the Bank, providing the necessary resources, and championing analytical
excellence has been instrumental in making this report possible. Their unwavering support has
strengthened the division’s capacity to produce high-quality and timely research output that
informs strategic decision-making and policy development.

III
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 IV

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 VII
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 Commodity markets appear to have regained some
degree of calm after the post-COVID boom. The global
economic recovery from COVID-19 boosted commodity
demand, causing price increases. The Russia-Ukraine
war further influenced oil, natural gas, and grain
prices due to Western-led sanctions against Russia
and reduced Russian exports. However, since 2023,
commodity prices have stabilized (Figure 2). This lull
continued into 2024, although prices remained at
historically high levels.
Although easing, supply chain constraints have
persisted. In 2024, the shipping sector witnessed a
remarkable resurgence driven by multiple factors,
including realigned shipping routes, severe port
congestion, and elevated operational expenses.
Consequently, shipping costs plummeted by
approximately 60% from the peak levels observed

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 Figure 1: Dynamics of World Uncertainty Index, 1990Q1-2024Q4

Source: Ahir, H., N. Bloom, and D. Furceri (2022), “World Uncertainty Index,” NBER Working Paper.
banks to adjust their policy stances to contain
Table 1: Recent Dynamics of GDP Growth in Major
infaltionary pressures. In 2022, global price increases
Economies
were driven by factors such as the post-COVID
2019 2020 2021 2022 2023 2024 economic rebound, ongoing supply chain disruptions,
growth, and rising debt in developing countries.
and rising geopolitical tensions. These increases
World 2.9 -2.7 6.6 3.6 3.3 3.2
culminated in the U.S. average inflation reaching
Advanced Economies 1.9 -4.0 6.0 2.9 1.7 1.8 historic level at 8.7%, while the Euro area recorded an
United States 2.6 -2.2 6.1 2.5 2.9 2.8 even higher rate of 10.6% (Figure 4). However, by the
end of 2024, inflation figures decreased significantly,
Euro Area 1.6 -6.1 6.2 3.3 0.4 0.8
settling at 2.3% in the United States and 2% in
Japan -0.4 -4.2 2.7 1.2 1.7 0.3 the Eurozone, a trend reflected across other major
United Kingdom 1.6 -10.3 8.6 4.8 0.3 1.1 economies. Considering these developments and
After recovering from the pandemic, the global supportedeconomy is economic
by sluggish experiencing a
fundamentals, central
Other advanced 2.0 -1.6 5.9 2.7 1.8 2.1
banks shifted to more
slowdown with uneven growth rates. The economic slowdown that started in
Economies
accommodative monetary
policies. Notably, in September 2024, the Federal
Emerging and 3.7 -1.8 7.0 4.0 4.4 4.2
2022 has continued into 2024, with global
developing GDP began
Reserve growth decreasing
a rate-cutting by starting
cylce, 0.1 with a
50-basis point reduction in the federal funds rate.
China percentage6.0points
2.2 to8.4
3.2%
3.0 (Table
5.2 1).
4.8 Advanced economies have seen limited

India 3.9 -5.8 9.7 7.0 8.2 7.0

Since 2022, the U.S. dollar has experienced significant
growth, with the U.S. maintaining around 3%appreciation,
in 2023 and 2024,levels
reaching whilenot
the euro
seen in the last two
Source: International Monetary Fund, World Economic Outlook (WEO), decades. The dollar index peaked in late 2022 and has
area struggled at 0.4% in 2023 and 0.8%
October 2024. insince
2024. Japan’s
stabilized, economy
on account declined
of the Federal Reserve’s
sharply
during the to pandemic,
COVID-19 0.3% in which
2024resulted
from in 1.7% the aggressive
previous interest rate hikes to
year, whereas thecombat
U.K. inflation.
Consequently, the dollar has become more attractive
historically high freight rates. However, it is crucial to to global investors. Geopolitical instability and
recognize that current shipping costs remain more economic downturns in other regions have prompted
than double the average rates experienced in 2023. a flight to safety, strengthening the dollar as a haven
This persistent cost elevation underscores ongoing asset, compared with weaker currencies, including
supply chain challenges and the residual impacts of the euro and yen, further bolstered the dollar’s
the pandemic (Figure 3) as of October 2024. performance. In 2024, the dollar index increased by
Generalised increase in price levels prompted central 2.2% compared with 2023, reflecting its resilience in a
complex global economic environment (Figure 5).

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 Figure 2: Global Dynamics ofFCommodity
igure 2: GlPrices
obal Dynamics of Commodity Prices

Source: World Bank, Commodity Markets, 2025.

Source: World Bank, Commodity Markets, 2025.

Figure 3: Shipping Figurand

Costs e 3Supply
: ShipChain
pingPressure
Costs and Supply Chain Pressure
Supply chain constraints, although they are easing, persist. In 2024, the shipping
sector witnessed a remarkable resurgence driven by multiple factors, including
realigned shipping routes, severe port congestion, and elevated operational
expenses. Consequently, shipping costs plummeted by approximately 60% from
the peak levels observed during the COVID-19 pandemic, which resulted in
historically high freight rates. However, it is crucial to recognize that current
shipping costs remain more than double the average rates experienced in 2023.
This
urce: Sources:
Federal persistent
Federal Reserve
Reserve cost
Bank, Bank
New elevation
York, (New
January 2025;underscores
York, Monetaryongoing
January
International 2025);
Fund, supply
IMF;
World Economic chain
World
Outlook, Octoberchallenges
Economic and
2024; and UN TradeOutlook
and Development, January 2025. Note: Panel (a) displays the average annual inflation rates. Panel (b) displays commodity price indices (average
2015–2019 = 100). In panel 3, shipping costs are proxied by the Shanghai Containerized Freight Index, and the supply chain pressure measure
the residual
EO, October
corresponds the Globalimpacts
to2024); UN Chain
Supply Trade of and
Pressure the pandemic,
Index.Development
“2015–19” as demonstrated
(UNCTAD,
on the x-axis represents January
the average in2025).
value over theFigure 3, as
Note:
2015–2019 period. of (a)
Panel
October
splaysGlobal
thetrade 2024. annual inflation rates. Panel (b) displays commodity price indices
average
is showing resilience despite challenges, 6.4% growth. In the first three quarters, Africa showed
including trade fragmentation. After a 5.1% strong trade momentum, reaching 80% of its total
veragecontraction
2015-2019in 2023, = 100).
global goodsIn panel
trade 3, shipping
rebounded costs
trade value are proxied by the Shanghai
in 2023.
to US$50.2 trillion, but its share of world output
ontainerized
remainedFreight Indexin(SCFI),
steady at 45.6% and6).the supplyIII.chain
2024 (Figure
Recentpressure measure
Macroeconomic corresponds
Developments in Africa to the
Advanced economies saw a 5.2% increase in trade 1. Africa’s Resilience
obal Supply
value, ledChain Pressure
by the United Indexand
States, Japan, (GSCPI).
South “2015-19” on the x-axis represents the average
The global economic slowdown has challenged African
Korea. In fact, South Korea had the highest trade
ue over the
growth 2015-2019
at 8.1%, while tradeperiod—AEs: advancedgrowth,
in the United States
yet the continent
economies; EMDEs: has remained
emergingresilient.
market and
Subdued global consumption in 2024, driven by
grew by 4.5%. Emerging and developing economies
geopolitical tensions and increased supply chain
veloping economies.
outperformed with a 5.5% growth rate, driven by
pressures, has negatively affected African exports,
China’s US$6.3 trillion in merchandise trade and India’s

idespread inflationary pressures emerged as a significant macroeconom

evelopment,
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10.11.47.196 their- UTC.
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a complex global economy (Figure 5).

Figure 4: Recent Developments

Figure 4: Rin
ecInflation
ent DevinelMajor
opmeEconomies.
nts in Inflation in Major Economies.

Source: Organisation for Economic Co-operation and Development, 2025.

Source: OECD, 2025.
Figure 5: US Dollar Index Dynamics
Figure 5: US Dollar Index Dynamics

Note: The United

Source: Investing.com, States
2025. Note: Dollar
The United Index
States (DXY)
Dollar Index measures
(DXY) measures theperformance
the dollar’s dollar’s against
performance against
a basket of currencies: EUR a
(57.6%), JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), and CHF (3.6%).
basket of currencies: EUR (57.6%), JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), and
especially in primary commodities. Domestically, Africa 2024. Although this growth rate remains below the
has been
CHF facingSource:
(3.6%). growth challenges stemming
Investing.com, from
2025. levels seen in 2022, it surpasses pre-pandemic figures
terrorism in the Sahel, conflicts in the Democratic from 2019, indicating a degree of recovery amid
Republic of Congo, and political instability in Sudan. ongoing difficulties (Figure 7).
Climate-related disasters have further hindered
From the demand side, Africa’s resilience is fueled by
economic prospects, including severe droughts in
Global trade is showing resilience
Somalia and the Sahel and cyclones in the Comoros,
despite
robust challenges,
household including
consumption, though trade
net exports
adversely affected overall performance. Household
Madagascar, and Mozambique. Despite these
fragmentation. After a 5.1% contraction consumption
challenges, the continent’s growth has improved
in 2023, demonstrated
global goods trade
resilience, rebounded
contributing
2.7 percentage points to GDP growth in 2024, up from
(albeit slightly), rising from 3.3% in 2023 to 3.4% in
to US$50.2 trillion, but its share of world output
1.8 in remained
2023. Investment steadyslowed,
contributions at 45.6%
adding in

2024 (Figure 6). Advanced economies saw a 5.2% increase in trade value, led
7
by the U.S., Japan, and South Korea. South Korea had the highest growth at
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1.8 percentage points, down from 2.0 (Figure 8). Public due to climatic disruptions; however, there has been
expenditure rose to 0.2 percentage points, returning a slight improvement in its growth contribution,
from -0.1 in 2023. However, stagnation in net exports increasing from 0.27 percentage points in 2023 to 0.33
continues to pose a significant challenge, contributing percentage points in 2024.
-0.8 percentage points to growth in 2024, worsening
Non-resource-intensive economies are becoming key
from -0.2 the prior year.
growth drivers in Africa, showing resilience against
A stable services sector underpinned the resilience global economic challenges. An analysis of growth
of African economies from the supply side. The in African economies reveals significant variations.
services sector contributed approximately 2.3% from In 2024, non-resource-intensive economies grew by
2023 to 2024 (Figure 9). In contrast, the industrial 5.1% from 4.9% in 2023 (Figure 10). This trend has
sector experienced a slight contraction, with its reflected strong performance since 2019, except for
contribution to economic growth decreasing by 0.1 2020, when COVID-19 impacted growth. Conversely,
percentage points compared with 2023, resulting resource-intensive economies are estimated to
in a revised contribution of 0.5 percentage points. experience slower growth, with a forecast of 2.3% for
The agricultural sector continues to face challenges 2024, representing an improvement of 0.7 percentage

Figure 6: Trends in Global Goods Trade

Figure 6: Trends in Global Goods Trade
(a) Global Trade Value (b) Global Trade Volume
From the demand side, African resilience is fueled by robust household
consumption, while net exports adversely affect overall performance. Household
consumption demonstrated resilience, contributing 2.7 percentage points to
GDP growth in 2024, an increase from 1.8 in 2023. Investment contributions
slowed, adding 1.8 percentage points, down from 2.0 (Figure 8). Public
expenditure rose to 0.2 percentage points, returning from -0.1 in 2023. However,
stagnation in net exports continues to pose a significant challenge, contributing
-0.8 percentage points to growth in 2024, worsening from -0.2 the prior year.
Sources:
Sources: IMF Monetary
International Direction
Fund of Trade
(IMF), DirectionStatistics (DOTS,
of Trade Statistics (DOTS), Dec 2024),
December IMF
2024; IMF, World
World Economic
Economic Outlook
Outlook, October 2024; and
Afreximbank Research. Note: Global trade encompasses the total exports and imports (current US$), with 2024 figures estimated from IMF DOTS
data and Afreximbank Research for the last quarter. These data exclude trade services.
(WEO, October 2024), and Afreximbank Research. Note: Global trade encompasses the total
exports
Figure and imports
7: Africa’s Real GDP (current US$), with 2024 Figures estimated from IMF DOTS data and
Growth, 2019–2024
Figure 7: Africa’s Real GDP Growth, 2019–2024
Afreximbank Research for the last quarter. Note that this data excludes trade services.

III. RECENT MACROECONOMIC DEVELOPMENTS IN AFRICA

1. African Resilience

The global economic slowdown has challenged African growth, yet the continent
Sources:
Sources: IMF, Monetary
International World Economic Outlook
Fund, World Economic (WEO),
Outlook, October
October 2024, 2024, and
and Afreximbank Afreximbank
Research. Research.
remains resilient. Subdued global consumption in 2024, driven by geopolitical
tensions and increased supply chain pressures, has negatively affected African

8exports, especially in primary commodities. Domestically, Africa is facing growth

Figure 8: Demand-Side Decomposition of Africa’s GDP Growth, 2019–2024
challenges stemming from terrorism in the Sahel, conflicts in the Democratic
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points from 2023 after a rebound in 2021. Notably, with an impressive growth rate of 8.6%, followed by
oil-exporting countries performed slightly better Ethiopia at 6.6%. In 2024, Eastern Africa recorded an
than other resource-rich countries, with an estimated average growth rate of 4.4%, slightly up from 2023,
growth rate of 3.2%, a slight decrease from the and outperformed Africa whose growth rose from
previous year. 3.6% in 2023 to 4.1% in 2024. Southern Africa also
experienced a slight increase in growth, improving
In 2024, Eastern Africa emerged as the best-
from 1.8% in 2023 to 2.2% in 2024, although South
performing region in terms of economic growth
Sources: IMF, World Economic Outlook Africa’s underperformance
(WEO), October held this growth
2024, and Afreximbank back. In
Research.
across the continent (Figure 11). Uniquely, Eastern
contrast, Northern Africa saw a decline in growth, with
Africa avoided a recession during the COVID-19
an estimated rate of 3.2% in 2024, due to instability in
pandemic in 2020 and has since demonstrated strong
Libya and sluggish economic activity in Algeria.
economic performance, achieving an average growth
rate of 4.4% from 2021 to 2024. Rwanda stood out

Figure 8: DDecomposition
Figure 8: Demand-Side emand-Side ofDeAfrica’s
compoGDPsition of Af2019–2024
Growth, rica’s GDP Growth, 2019–2024

Source:
Sources: WorldWorld Bank, IMF,
Bank; International WEO,
Monetary Fund,October 2024,
World Economic and
Outlook, Afreximbank
October Research.
2024; Afreximbank Research.

Figure 9: Sectoral Decomposition of Africa’s GDP Growth, 2019–2024

Figure 9: Sectoral Decomposition of Africa’s GDP Growth, 2019–2024
A stable services sector underpinned the resilience of African economies from

Source:
Sources: WorldWorld Bank, IMF,
Bank; International WEO,
Monetary Fund,October 2024,
World Economic and
Outlook, Afreximbank
October Research.
2024; Afreximbank Research.

Figure 10 Real GDP Growth by Economic Groups, 2019–2024

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 Source: World Bank, IMF, WEO, October 2024, and Afreximbank Research.

Figure 10 Real GDP Growth by Economic Groups, 2019–2024

Figure 10 Real GDP Growth by Economic Groups, 2019–2024

Northern Africa saw a decline in growth, with an estimated rate of 3.2% in 2024,
affected by instability in Libya and sluggish economic activity in Algeria.
Source:
Sources: IMF WEO
International (October
Monetary 2024)
Fund, World and
Economic Afreximbank
Outlook, Research.
October 2024; Afreximbank Research.

Figure 11: Real GDP Growth

Figby
ureRegion,
11: Re2019–2024
al GDP Growth by Regions, 2019–2024

In 2024, Eastern Africa emerged as the leader in regional economic growth

across the continent. Uniquely, Eastern Africa avoided a recession during the
COVID-19 pandemic in 2020 and has since demonstrated strong economic
performance, achieving an average growth rate of 4.4% from 2021 to 2024.
Rwanda stood out, with an impressive growth rate of 8.6%, followed by Ethiopia
at 6.6%. In 2024, Eastern Africa recorded an average growth rate of 4.4%,
slightly up from 2023, and outperformed Western Africa. The growth in this
region rose from 3.6% in 2023 to 4.1% in 2024. Southern Africa also
experienced a slight increase in growth, improving from 1.8% in 2023 to 2.2% in
2024, although South Africa’s underperformance held this back. In contrast,
Source: IMF WEO
Sources: International (October
Monetary 2024)
Fund, World and
Economic Afreximbank
Outlook, Research.
October 2024; Afreximbank Research.

2. Monetary Policy and the Challenges of Inflation economies are facing higher inflation, with rates
nearing 40% over the past five years, though it
Since 2020, inflation in Africa exceeded double digits
decreased to 23% in 2024 due to higher import costs.
due to supply chain bottlenecks, rising oil prices,
2. and expansionary
geopolitical tensions, Monetarmonetary
y Policy and tOil-exporting
he Challecountries
nges osaw f Ininflation
flatiorise
n from 12.2%
in 2022 to 23% in 2024. Meanwhile, non-resource-
policies. In 2024, the average inflation rate on the
intensive economies entered a disinflationary cycle,
continent reached 19.3%, up by 1.1 percentage points
with inflation dropping from 12.5% in 2022 to 7.8% in
from 2023 (Figure 12). Non-oil resource-intensive
2024.
Since 2020, inflation in Africa exceeded double digits due to supply chain issues,
rising oil prices, geopolitical tensions, and expansionary monetary policies. In
2024, the average inflation rate on the continent reached 19.3%, up by 1.1
percentage
10
points from 2023 (Figure 12). Non-oil resource-intensive economies
are facing stronger inflation, with rates nearing 40% over the past five years,
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percentage points increase to reach 23.4%. Inflation rates reached notab
peaks during the same period, with Egypt experiencing 33.3%, Nigeria at 32.5%
FigureGroup,
Figure 12: Inflation by Economic 12: Inf2019–2024
lation by Economic Groups, 2019–2024
and Sierra Leone at 36.6%. In contrast, the West African Economic an
Monetary Union (WAEMU) and the Central African Economic and Monetar
Community (CEMAC) maintained relatively lower interest rates due to mor
stable inflation, helped by their pegs to the Euro. Nonetheless, both monetar
unions recorded increases in interest rates: WAEMU saw a rise of 2 percentag
points, while CEMAC experienced a modest uptick of 0.1 percentage points
2024 (Figure 14).
Source:
Sources: IMF WEO
International (October
Monetary 2024)
Fund, World and
Economic Afreximbank
Outlook, Research.
October 2024; Afreximbank Research.

Fig
Figure 13: Inflation by Region, ure 13: Inflation
2019–2024 by Regions, 2019–2024
Inflation dynamics across Africa have shown significant regional differences
(Figure 13). Western Africa experienced the highest inflation increase, from
20.6% in 2023 to 21.4% in 2024. Likewise, Northern Africa saw a more
moderate inflation rise, with an increase of 0.7 percentage points, bringing the
rate to 18.5% in 2024, up from 17.8% the previous year. However, disinflationary
trends have emerged in the Central, Eastern, and Southern regions in 2024.
Southern Africa witnessed a substantial decrease in inflation, plummeting from
38.9% in 2023 to 20.1% in 2024. This drop is attributed to effective inflation
control measures implemented in Zimbabwe. In Central Africa, inflation declined
by 2.1 percentage points, falling from 10.5% in 2023 to 8.4% in 2024.
Meanwhile, Eastern Africa experienced a slight disinflation of 0.3 percentage
points, with inflation decreasing from 21.2% in 2023 to 20.9% in 2024. The
Sources: International Monetary Fund, World Economic Outlook, October 2024; Afreximbank Research.
Source: IMF WEO (October 2024) and Afreximbank Research.
continuation of high inflation rates in several regions can be attributed to the
Inflation dynamics across Africa have shown significant control measures implemented in Zimbabwe. In Central
ongoing
regional depreciation
differences (Figure 13).of African
Western Africacurrencies against
Africa, inflationthe US by
declined dollar. This situation
2.1 percentage points,
experienced the highest inflation increase, from 20.6% falling from 10.5% in 2023 to 8.4% in 2024. Meanwhile,
is2023
in further
to 21.4% exacerbated by extreme
in 2024. Likewise, Northern Africa weather
Eastern Africaevents that
experienced have
a slight disrupted
disinflation of 0.3
saw a more moderate inflation rise, with an increase percentage points, with inflation decreasing from
agricultural
of production
just about 0.7 percentage and
points, increased
bringing the price21.2%
levels across
in 2023 theincontinent.
to 20.9% 2024. The persistence of
rate to 18.5% in 2024, up from 17.8% the previous high inflation rates in several regions can be attributed
year. However, disinflationary trends emerged in to the ongoing depreciation of African currencies
the Central, Eastern, and Southern regions in 2024. against the U.S. dollar. This situation is further
In 2024,
Southern inwitnessed
Africa response to elevated
a substantial decrease ininflationary
exacerbatedpressures, most events
by extreme weather centralthat banks
have
inflation, plummeting from 38.9% in 2023 to 20.1% disrupted agricultural production and increased price
across
in 2024. ThisAfrica adoptedto aeffective
drop is attributed tightinflation
monetary levels
policy stance.
across On average, monetary
the continent.

policy interest rates were raised by 2.1 percentage points between December
11
2023 and December 2024. Significant hikes were observed in Egypt, where
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Figure 14: Monetary Policy-Related
Figure Interest
14: MonRate
etary Policy-Related Interest Rate

deterioration with a growing deficit, while the Republic of Congo sees a

declining surplus. In Eastern and Southern Africa, deficits have reduced by 0.3
percentage points due to fiscal consolidations in Burundi, Ethiopia, and Kenya,
although Comoros, Djibouti, and Rwanda face worsening fiscal positions.
Southern Africa benefits from improvements in Angola, Madagascar, Malawi,
Namibia, and Zambia. Conversely, Northern Africa's fiscal deficit is estimated to
rise to 9% of GDP in 2024 from 5.1% in 2023, driven by issues in the energy
sector and currency devaluation, particularly in Egypt and Algeria. Libya's fiscal
situation shifted from an 8.2% surplus in 2023 to a 4.8% deficit in 2024. In
Western Africa, fiscal deficits remain stable, increasing slightly from 4.3% to
4.5%, with Senegal and Burkina Faso having the highest deficits at 7.5% and
5.7%, respectively. Most other countries maintain deficits below 5%, notably
Note: Data is Faso,
Mauritania available
Union (Benin, Burkinaat 1.2%. for WAEMU (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali,
Source: International Monetary Fund, International Financial Statistics, 2024. Note: Data are available for the West African Economic and Monetary
Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Togo) and the Central African Economic and Monetary Community
(Cameroon, Central African Republic, Chad, Gabon, Equatorial Guinea, Republic of Congo), both of which are monetary unions.
Niger, Senegal, Togo) and CEMAC (Cameroon, Central African Republic, Chad, Gabon,
Equatorial
Figure Guinea,
15: Fiscal BalanceRepublic of by
(Percent GDP) Congo), both
Economic of 2019–2024
Group, which are monetary unions. Source: IMF,
Figure 15: Fiscal Balance (Percent GDP) by Economic Groups, 2019–2024
International Financial Statistics (IFS), 2024.

3. Persistent Fiscal Imbalances

Africa has been facing a persistent fiscal deficit since the COVID-19 pandemic.
The fiscal deficit rose to 7.1% of GDP during the pandemic, driven by
government spending in 2020 (Figure 15). By 2022, it had improved to 4.5% but
widened to 4.3% in 2023 and is estimated to reach 5.8% in 2024 due to rising
interest payments and currency depreciation. Oil-exporting countries’ deficits
Source: IMF, WEO, October
Fund, World2024.
increased to 7% of GDP in 2024, up from 4.4% in 2023, fueled by steady oil
Source: International Monetary Economic Outlook, October 2024.

prices and increased spending. Resource-intensive economies stabilized at

around 5% after reaching a peak of 8.2% in 2020, while non-resource-
12
dependent economies reduced deficits from 6.2% in 2020 to 4.2% in 2024
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 In 2024, in response to elevated inflationary pressures, in Sierra Leone, which saw a 3.7 percentage points
most central banks across Africa adopted a tight increase to reach 23.4%. Inflation rates reached
monetary policy stance. On average, monetary notable peaks during the same period, with Egypt
policy interest rates were raised by 2.1 percentage experiencing 33.3%, Nigeria at 32.5%, and Sierra
points between December 2023 and December 2024. Leone at 36.6%. In contrast, the West African
Significant hikes were observed in Egypt, where rates Economic and Monetary Union (WAEMU) and the
surged by 6.75 percentage points to 26%; in Nigeria, Central African Economic and Monetary Community
with a 6.1 percentage points increase to 24.6%; and (CEMAC) maintained relatively lower interest rates due

Figure 16: Fiscal Balance (Percent GDP) by Region, 2019–2024

Figure 16: Fiscal Balance (Percent GDP) by Regions, 2019–2024
77.7%, down from 79.4% in 2023, driven by reductions in Algeria and Tunisia.
Central and Western Africa saw the lowest debt ratios, with Central Africa
declining to 38.7% and Western Africa to 51.1%, though Burkina Faso, Ghana,
and Sierra Leone did not follow this trend. In Central Africa, the drop in debt
ratios was due to improvements in Cameroon, the Central African Republic, the
Democratic Republic of the Congo, the Republic of Congo, and São Tomé and
Príncipe. Southern Africa's ratio decreased to 71% in 2024 from 75.6% in 2023,
although Angola, Lesotho, and Namibia were exceptions. Eastern Africa's debt
ratio remained stable around 60% from 2020 to 2023 before dropping
significantly to 52.2% in 2024, but Sudan's situation worsened to 354.3% of
GDP.

Source: IMF, WEO,

Source: International October
Monetary Fund, World2024.
Economic Outlook, October 2024.

Figure 17: Public

FigDebt
ure (Percent
17: PubliGDP)
c Deby
bt Economic
(PercentGroup,
GDP) 2019–2024
by Economic Groups, 2019–2024

Persistent deficits have driven Africa’s debt-to-GDP ratio above 60% since the
COVID-19 pandemic. African economies have shown resilience, increasingly
relying on external borrowing since 2020 to navigate global crises and secure
development funding. The continent’s debt-to-GDP ratio experienced an
upward trend, increasing from 59% in 2019 to 69.2% in 2020. It subsequently
decreased to 65.7% by 2022 before reaching a new peak of 69.6% in 2023.
Projections for 2024 indicate a further decline, with the ratio expected to drop
to 67.2% (Figure 17). It subsequently decreased to 65.7% by 2022 before
reaching a new peak of 69.6% in 2023. Projections for 2024 indicate a further
Sources: International Monetary Fund, World Economic Outlook, October 2024; Afreximbank Research.
Source: IMF WEO (October 2024) and Afreximbank Research.
decline, with the ratio expected to drop to 67.2%. Resource-intensive countries
13

have the highest debt ratios, which peaked at 77.6% in 2023 but are expected
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to more stable inflation, helped by their pegs to the fiscal deficit is estimated to have risen to 9% of GDP in
Euro. Nonetheless, both monetary unions recorded 2024 from 5.1% in 2023, driven by weaknesses in the
increases in interest rates: WAEMU saw a rise of 2 energy sector and currency devaluation, particularly in
percentage points while CEMAC experienced a modest Egypt and Algeria. Libya’s fiscal position shifted from
uptick of 0.1 percentage points in 2024 (Figure 14). an 8.2% surplus in 2023 to a 4.8% deficit in 2024. In
Western Africa, fiscal deficits remain stable, increasing
3. Persistent Fiscal Imbalances
slightly from 4.3% to 4.5%, with Senegal and Burkina
Africa has faced a fiscal deficit since the COVID-19 Faso having the highest deficits at 7.5% and 5.7%,
pandemic. The deficit rose to 7.1% of GDP during the respectively. Most other countries maintain deficits
pandemic, driven increased government government below 5%, notably Mauritania at 1.2%.
spending in 2020 (Figure 15). By 2022, it had improved
Persistent deficits have driven Africa’s debt-to-GDP
to 4.5%, but it widened to 4.3% in 2023 and was
ratio above 60% since the COVID-19 pandemic.
estimated to reach 5.8% in 2024 due to rising interest
African economies have shown resilience, increasingly
payments on debt and currency depreciation. Oil-
relying on external borrowing since 2020 to navigate
exporting countries’ deficits increased to 7% of GDP
global crises and secure development funding. The
in 2024, up from 4.4% in 2023, fueled by steady oil
continent’s debt-to-GDP ratio trended upward,
prices and increased spending. Resource-intensive
increasing from 59% in 2019 to 69.2% in 2020. It
economies’ deficits stabilized at around 5% after
subsequently decreased to 65.7% by 2022 before
reaching a peak of 8.2% in 2020, while non-resource-
reaching a new peak of 69.6% in 2023. Projections
dependent economies reduced their deficits from 6.2%
for 2024 indicated a further decline, with the ratio
in 2020 to 4.2% in 2024 through improved expenditure
expected to drop to 67.2% (Figure 17). It subsequently
management (Figure 15).
decreased to 65.7% by 2022 before reaching a new
Fiscal deficits across Africa exhibit significant regional peak of 69.6% in 2023. Projections for 2024 indicated
disparities (Figure 16). Central Africa has the strongest a further decline, with the ratio expected to drop
fiscal position, with expectations of near fiscal balance to 67.2%. It subsequently decreased to 65.7% by
by 2024, though it faces widening imbalances due 2022 before reaching a new peak of 69.6% in 2023.
to commodity price fluctuations and varying fiscal Projections for 2024 indicate a further decline, with
policies. Gabon is experiencing significant deterioration the ratio expected to drop to 67.2%. Resource-
with a growing deficit while the Republic of Congo intensive countries have the highest debt ratios, which
sees a declining surplus. In Eastern and Southern peaked at 77.6% in 2023 but which are expected to
Africa, deficits have reduced by 0.3 percentage points decline to 73.7% in 2024. Oil-exporting economies
due to fiscal consolidations in Burundi, Ethiopia, and are nearly 70% of GDP, at 68.5% in 2023 and 68.1%
Kenya, although Comoros, Djibouti, and Rwanda face in 2024. Non-resource-rich economies saw their
worsening fiscal positions. Southern Africa benefits debt stabilize around 63% between 2020 and 2023,
from improvements in Angola, Madagascar, Malawi, dropping to 57.9% in 2024.
Namibia, and Zambia. Conversely, Northern Africa’s
Figure 18: Public Debt (Percent GDP) by Region, 2019–2024
Figure 18: Public Debt (Percent GDP) by Regions, 2019–2024

Sources: International Monetary Fund, World Economic Outlook, October 2024; Afreximbank Research.
Source: IMF WEO (October 2024) and Afreximbank Research.
14

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export diversification, and fluctuations in commodity prices.

FiguFigure
re 19:19:
CCost
ost of
ofBorrowing
BorrowionngAfrican
on ADebt,
frica2008–2024
n Debt, 2008-2024

O (October 2024) and

Sources: International Afreximbank
Monetary Research.
Fund, World Economic Outlook, October 2024; Afreximbank Research.

The continent displays considerable regional variations due to improvements in Cameroon, the Central African
in public debt dynamics (Figure 18). In 2024, Northern Republic, the Democratic Republic of the Congo,
Africa’s public debt-to-GDP ratio improved to 77.7%, the Republic of Congo, and São Tomé and Príncipe.
down from 79.4% in 2023, driven by reductions in Southern Africa’s ratio decreased to 71% in 2024
Algeria and Tunisia. Central and Western Africa saw from 75.6% in 2023, although Angola, Lesotho, and
the lowest debt ratios, with Central Africa declining to Namibia were exceptions. Eastern Africa’s debt ratio
38.7% and Western Africa to 51.1%, though Burkina remained stable around 60% from 2020 to 2023
Faso, Ghana, and Sierra Leone did not follow this before dropping significantly to 52.2% in 2024, but
trend. In Central Africa, the drop in debt ratios was Sudan’s situation worsened to 354.3% of GDP.

15

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The recent cost increase, which is attributed to Current account deficits among African economies
rising global interest rates, is a significant aspect exhibit considerable regional variations (Figure 21).
of the continent’s debt. Borrowing costs for African In Northern Africa, the current account deficit as a
countries have surged, with effective interest rates percentage of GDP expanded to 3.4% of GDP in 2024
reaching 8.2% in 2024, compared with rates of 5.4% from a balanced position in 2023, reflecting substantial
to 6.3% between 2008 and 2019 (Figure 19). This declines in Egypt (-5 percentage points), Algeria (-2.1
escalation has resulted in various economic challenges, percentage points), and Morocco (-1.3 percentage
including increased inflation and improved lender risk points). In Eastern Africa, deficits remain above the
perception. Interest payments as a percentage of continental average, stabilizing at 4.5% of GDP in 2023
GDP rose to 5% in 2024 and now comprise 27.5% of and tightening slightly to 4.2% in 2024. The alarming
government revenue. This situation raises concerns forecast for Rwanda and Burundi is noteworthy; their
about funding essential programs, particularly for the deficits are estimated at 12.2% of GDP and 17.3% of
poorest countries that find investing in crucial sectors GDP, respectively. By contrast, Djibouti is set to achieve
such as health, education, and the environment a surplus of 5.4% of GDP. Western Africa exhibits
complex. notable progress in external balances, with a modest
deficit of 0.2% of GDP in 2024, supported by surpluses
4. Deteriorating External Position
from key economies such as Ghana, Guinea, and
The current account deficit has been increasing but Nigeria. Southern Africa, however, has been grappling
remains below pre-pandemic levels. Between 2021 and with an upward trend in current account deficits since
2023, it decreased to less than 2% of GDP due to rising 2022, culminating in a deficit of 2.3% of GDP in 2024.
commodity prices. However, it rose to 2.4% of GDP in Significant deteriorations are observed in Botswana
2024 as global commodity prices softened while import (3.6 percentage points), Lesotho (3.6 percentage
costs stayed high (Figure 20). Non-resource-intensive points), and Mozambique (12.6 percentage points).
economies face significant deficits, averaging 4.7% In contrast, Central Africa has narrowed its current
of GDP, compared with 2.5% for resource-intensive account deficit from 2.6% of GDP in 2023 to 1.9%
economies. Oil-exporting countries recorded a surplus in 2024, a change attributed to its net oil-exporting
of 1.1% of GDP in 2022, but this surplus became a status. This improvement is standard, with the
deficit of 1.5% in 2023. Resource-intensive economies exceptions of Chad and the Republic of Congo, which
not concentrated on oil peaked at 3.5% of GDP in face ongoing challenges.
2022 and 2023, with estimates suggesting a decrease
The analysis of the current account shows that
to 2.5% of GDP by 2024 (Figure 20). The continent’s
fiscal deficits significantly affect the continent’s net
structural deficit stems from African countries’ reliance
external position dynamics. The increase in Africa’s
on imports, low export diversification, and fluctuations
current account deficit in 2023 and 2024 is due to
in commodity prices.
a rising fiscal deficit while net private savings have

Figure 20: Current Account (Percent GDP) by Economic Group, 2019–2024

Figure 20: Current Account (Percent GDP) by Economic Groups, 2019–2024

Source:
Sources: IMF WEO
International (October
Monetary 2024)
Fund, World and
Economic Afreximbank
Outlook, October 2024; Research.
Afreximbank Research.

16

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consumption.

FiguAccount
Figure 21: Current re 21: C urrent GDP)
(Percent AccobyuRegion,
nt (Per2022–2024
cent GDP) by Regions, 2022–2024

Sources: International Monetary Fund, World Economic Outlook, October 2024; Afreximbank Research.
Source: IMF WEO (October 2024) and Afreximbank Research.
Figure 22: Current
FiguAccount Decomposition
re 22: C urrent Accou(Percent
nt DecoGDP),
mpo2000–2024
sition (Percent GDP), 2000-2024

Sources: International Monetary Fund, World Economic Outlook, October 2024; Afreximbank Research.
Source: IMF WEO (October 2024) and Afreximbank Research.

remained relatively stable (Figure 22). This increase local consumption.

suggests that government spending contributes to
On the financing side, market access improved due to
fiscal deficits and has increased domestic demand,
rising sovereign ratings for African frontier countries.
which is satisfied through imports instead of locally
Enhancements in credit ratings significantly affect
On the goods
produced financing side,African
and services. market access improved
policymakers dueThese
debt dynamics. to rising sovereign
ratings allow ratings
frontier markets
should encourage domestic production by prioritizing
to issue bonds in foreign and local currencies, which
government
for African contracts for local
frontier firms and promoting
countries. Enhancements in credit ratings significantly affect
debt dynamics. These ratings allow frontier markets to issue bonds in foreign
17

and local currencies, which is vital for accessing markets. In 2024, several
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is vital for accessing markets. In 2024, several US$750 million bond at 7.75%, Cameroon’s US$550
African countries saw positive changes in their credit million at 10.75%, and South Africa’s US$3.5 billion
ratings, receiving upgrades from major agencies issuance. In December 2024, Nigeria raised US$2.2
such as Standard & Poor’s (S&P), Moody’s, and Fitch. billion, and Angola issued US$1.2 billion. Cumulatively,
Specifically, these agencies upgraded six countries: African countries issued US$20.9 billion in Eurobonds
Benin, Cameroon, Cabo Verde, Côte d’Ivoire, Tanzania, from January 2024 to February 2025, with an average
and Zambia. The credit rating outlook was revised to maturity of more than nine years and an interest rate
positive for eight other countries: Côte d’Ivoire, Egypt, of approximately 9% (Figure 23).
Gabon, Morocco, Namibia, Nigeria, Seychelles, and
IV. Recent Trade Developments in Africa
Tunisia. Notably, Niger and Uganda faced downgrades
due to fiscal deterioration, even amid overall regional With improvements in the international context,
improvements. Africa’s trade recovery has been effective, though
it remains moderate in 2024. After rebounding
Market access for several African countries resumed in
from the lows experienced during the pandemic,
2024, thanks to improved credit ratings and a rate-
Africa’s goods trade reached record highs in 2022,
cut cycle, although with higher premiums. In 2024,
with total trade (exports and imports) amounting
several African countries experienced credit rating
to US$1,407 billion (Figure 24). However, in 2023,
upgrades from agencies such as S&P, Moody’s, and
due to tightening monetary policies amid a highly
Fitch, though these upgrades could be reversed. Six
uncertain international environment, African trade lost
countries—Benin, Cameroon, Cabo Verde, Côte d’Ivoire,
steam, declining by about 6%. In 2024, Africa’s trade
Tanzania, and Zambia—received upgrades while
gathered momentum, growing by 5.8% and returning
eight others revised their outlooks positively (Table
to 2022 levels. Despite slower growth in most trading
2). The revival of the Eurobond market indicated a
partners—especially China and Europe—Africa’s
shift in access, marked by higher premiums resulting
goods exports increased by approximately 10%,
from interest rate hikes by the U.S. Federal Reserve
reaching US$682 billion. Exports rose by 9.8% while
since March 2022. There was significant Eurobond
imports grew by about 2.4%, totaling US$719 billion.
issuance following the improved ratings, with Côte
As a result, Africa narrowed its goods trade deficit
d’Ivoire raising US$2.6 billion in early 2024 through
to US$37 billion in 2024, down from US$80 billion in
bonds maturing in 9 and 13 years at 6.30% and 6.85%,
2023. This expansion in Africa’s exports in 2024 was
respectively. Benin issued a US$750 million bond with
supported by stabilizing commodity prices, marking
a 14-year maturity at 8.375%; Kenya raised US$1.5
a significant shift from the volatility seen in previous
billion through a seven-year note with a yield of
years. Compared with 2023, fluctuations in commodity
10.375%. Other notable issuances included Senegal’s

Figure 23Issuance
Figure 23: Eurobonds : EuroboYear
ndstoIsDate,
suanc e YeaSeptember
Africa, r to Date,2024
Africa (As of September 2024)

Source: Afreximbank Research.

Source: Afreximbank Research.

18

IV. R
ECEfrom
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NT 10.11.47.196
RADE atEV D
ELOPM09:10:38
2025-06-30 A
ENTS I-NUTC.FUnauthorized
RICA Distribution Prohibited.
 Table 2: Latest Credit Ratings, African Countries, September 2024

Sovereign Moody’s S&P Fitch

Previous Current Direction Previous Current Direction Previous Current Direction
UPGRADES
Benin BB- (stable) BB- (pos)
Cameroon BB- (stable) BB- (pos)
Cabo Verde B- (stable) B (stable)
Cote d’ivoire BB- (stable) BB- (pos)
Tanzania B2 (pos) B1 (stable)
Zambia Ca (stable) Caa2 (stable)
Total 2 3 1
DOWNGRADES
Niger Caa2 (Neg) Caa3 (stable)

Gabon Caa1 (Neg) Caa2 (stable)

Uganda B2 (Neg) B3 (stable)

Total 3
POSITIVE CHANGES CREDITATING OUTLOOKS
Cote d’ivoire BB- (stable) BB- (pos)
Egypt Caa1 (Neg) Caa1 (pos) B- (stable) BB- (pos) B- (stable) B- (pos)
Gabon B- (Neg) B- (stable)
Morocco BB+ (stable) BB+ (pos)
Namibia B1 (stable) B1 (pos)
Seychelles BB- (stable) BB- (pos)
African
Tunisia countries
Caa1 (Neg) were much less pronounced, with quarterly changes confined
Caa2 (stable)
Nigeria B- (stable) B- (pos)
within
Total
a ±2% range.3 This provided resource-rich
3
countries with
4
a more
predictable
Source: Afreximbanktrade
Research. environment.

Figure 24: Trends in Africa’s F

Trade
igure(US$
24:Billion)
Trends in Africa’s Trade (US$ billion)

Source:
Sources: IMF,Monetary
International Direction of Direction
Fund (IMF), Tradeof Trade
Statistics (DOTS,
Statistics (DOTS), December
December 2024),
2024; Afreximbank and
Research. Note:Afreximbank
Total trade refers
to the combined value of exports and imports. The figures for 2024 are estimates based on IMF DOTS data and Afreximbank Research for the final
quarter. These data do not include trade in services.
Research. Note: Total trade refers to the combined value of exports and imports. The
Figures for 2024 are estimates based on IMF DOTS data and Afreximbank Research for the
19
final quarter. Please note that this data does not include trade in services.
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prices for African countries were much less best trade balance, with a surplus of US$47.8 billion,
pronounced, with quarterly changes confined within while Libya and Nigeria followed with surpluses of
a ±2% range. This stabilization provided resource-rich US$17 billion and US$10.7 billion, respectively.
countries with a more predictable trade environment.
The European Union (EU) is Africa’s largest source of
Oil-exporting countries, including Algeria, Angola, imports at 29% and its leading export destination
and Nigeria, experienced significant benefits from at 31% (Figure 26). In 2024, total exports to the EU
the relative stability of global crude oil prices in 2024. increased by 0.8% compared with 2023, reaching
Following the price surges in 2022 driven by the US$210 billion, while imports from the EU remained
Russia-Ukraine war and the price moderation in 2023 stable at US$179 billion. Within the EU, France,
due to a global economic slowdown, 2024 marked Germany, Italy, the Netherlands, and Spain emerged
a period of balanced oil markets. Consequently, as significant individual partners. China is Africa’s
oil-exporting countries were able to maintain second-largest trading partner, representing 18.3%
strong export earnings while avoiding severe price of imports and 12.6% of exports. In 2024, imports
fluctuations. A comparable situation applied to from China notably surpassed exports, totaling
estimates
mineral suggesting
exporters, US$108
particularly those producingbillion in exports and inUS$106
US$132 billion imports andbillion in imports
US$86 billion by
in exports,
critical resources for the global energy transition, emphasizing China’s role as a major supplier to African
year-end.
such Egyptmanganese,
as cobalt, copper, ranks second,
and platinum with totalmarkets.
tradeIntra-African
reachingtrade US$88 billion;
shows strong its first
performance,
group metals. These resources have become strategic approaching the levels of Africa’s trade relationship
threefurther
assets, quarters showed
enhancing Africa’sUS$66 billion, up with
export revenues. from US$74
China. billion
Other notable in 2023.
partners, such asNigeria
Türkiye, is
The leading player in African trade, South Africa Korea, and Japan, demonstrate modest engagement,
in third
accounts for place,
about 15% showcasing balanced
of the continent’s total reflecting
trade withmore specialized
US$70 or nicheintrade
billion relationships.
exports and
trade (Figure 25). By the third quarter of 2024, Africa’s trade remains resilient amid fragmentation
trends, with a firm reliance on traditional partners and a
US$60
South billion
Africa’s intotaled
exports imports.
US$82.3Côte
billion d’Ivoire,
and contributing 2.6% of trade, saw stable
limited yet growing intra-African trade network.
imports US$79.6 billion, with estimates pointing
imports
to at US$19
US$108 billion in exportsbillion butbillion
and US$106 decreased
in exports totrade
Intra-African US$18 billion.
continued Duein to
to expand 2024rising
imports by year-end. Egypt ranks second, with total despite international challenges. Total trade within
trade reaching
exports, US$88 billion;
Angola haditsthe
first best
three quarters
trade balance with areached
the continent surplus
US$208of billion
US$47.8in 2024,billion,
up
showed US$66 billion, up from US$74 billion in 2023. from US$193 billion in 2023 (Figure 27). Increased
In third place,
while Libya Nigeria
and showcases
Nigeria balanced trade with
followed with surpluses
exports haveof US$17
driven billion
the growth and economies
of African US$10.7
US$70 billion in exports and US$60 billion in imports. due to the implementation of the African Continental
Côte d’Ivoire, contributing 2.6% of trade, saw stable Free Trade Area (AfCFTA). This initiative aims to
billion, respectively.
imports at US$19 billion but decreased exports at reduce trade barriers and enhance cooperation
US$18 billion. Due to rising exports, Angola had the among African countries.

Figure 25: Africa’s Top 10 Trading

FigCountries
ure 25: Africa’s Top 10 Trading Countries

Source:
Sources: IMF, Direction
International Monetary Fundof Trade
(IMF), DirectionStatistics (DOTS,
of Trade Statistics December
(DOTS), December 2024); Afreximbank
2024; Afreximbank Research. Note: TheResearch.
bars
represent midpoint estimates for 2024 from IMF DOTS and Afreximbank, excluding services. From the first quarter of 2022 to the third quarter of
2024, selected countries accounted for 66% of Africa’s imports and 71% of its exports.
Note: The bars represent midpoint estimates for 2024 from IMF DOTS and Afreximbank,
excluding services. From the first quarter of 2022 to the third quarter of 2024, selected
20
countries will account for 66% of Africa’s imports and 71% of its exports.
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billion and US$28.8 billion, respectively. Meanwhile, Northern Africa saw its
exports increase from US$16.9 billion to US$20.6 billion, and Central Africa
Figure 26: Africa’s Main Trade F
Partners,
igure 262024
: Africa’s Main Trade Partners (2024)
experienced the slowest growth, with exports rising from US$8.7 billion to
US$10.6 billion. Southern Africa led in imports, growing from US$19.4 billion to
US$22.3 billion, followed closely by Eastern Africa and Western Africa, which
reached US$23.6 billion and US$24.6 billion, respectively. Overall, while the
dynamics of African trade are positive, growth is concentrated within sub-
regions that exhibit varying levels of integration. Addressing structural
challenges is crucial to enhancing trade relations and maximizing regional trade
potential. Key players in intra-African trade include Côte d’Ivoire, Egypt, Nigeria,
and South Africa, with South Africa accounting for 25% of intra-African exports
and 12% of imports.
Sources: International Monetary Fund, Direction of Trade Statistics, December 2024; Afreximbank Research. Notes: Shares in trade of goods. Data
Source: IMF, Direction of Trade Statistics (DOTS, December 2024), and Afreximbank Research.
are from Q1 to Q3 2024. Selected trade partners account for 90% of Africa’s trade.

Notes: Shares in trade of goods. Data from Q1 to Q3 2024. Selected trade partners account for
Figure
90% 27:
of Trends Figure 2
in Intra-African
Africa’s trade. 7: Tr(US$
Trade endsBillion)
in Intra-African Trade (US$ billion)

Between 2023 and 2024, intra-African trade surged, with Southern Africa being
the most significant contributor (Table 3). Exports from Southern Africa rose

Source:
Sources: IMF, Direction
International Monetary Fundof(IMF),
Trade Statistics
Direction (DOTS,
of Trade Statistics December
(DOTS), 2024),
December 2024; and Research.
Afreximbank Afreximbank
Note: TotalResearch.
trade is
defined as the sum of exports and imports. Figures for 2024 are estimates based on IMF DOTS data and Afreximbank Research for the last quarter.
Note:
Data Total
do not includetrade
trade inis defined as the sum of exports and imports. Figures for 2024 are estimates
services.

Between
based on 2023
IMFand 2024,data
DOTS intra-African trade surged,Research
and Afreximbank to US$22.3
for the billion,
last followed
quarter.closely
Data by Eastern
does not Africa
include
with Southern Africa being the most significant and Western Africa, which reached US$23.6 billion
contributor (Table
trade in services. 3). Exports from Southern and US$24.6 billion, respectively. Overall, while the
Africa rose from US$29.5 billion to US$35.9 billion, dynamics of African trade are positive, growth is
reflecting a 21.7% increase. Eastern and Western concentrated within subregions that exhibit varying
Africa experienced significant export growth, reaching levels of integration. Addressing structural challenges
US$23.3 billion and US$28.8 billion, respectively. is crucial to enhance trade relations and maximize
Meanwhile, Northern Africa saw its exports increase regional trade potential. Key players in intra-African
from US$16.9 billion to US$20.6 billion, and Central trade include Côte d’Ivoire, Egypt, Nigeria, and South
Africa experienced the slowest growth, with exports Africa, with South Africa accounting for 25% of intra-
rising from US$8.7 billion to US$10.6 billion. Southern African exports and 12% of imports.
Africa led in imports, growing from US$19.4 billion

21

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average.

Figure 28: Global and African Growth Outlook

Figure 28: Global and African Growth Outlook

Source:
Sources: IMF WEO
International (October
Monetary 2024)
Fund, World and
Economic Afreximbank
Outlook, October 2024;Research.
Afreximbank Research.

Table 3: Subregional Performances in Intra-African Trade

Intra-African trade (total, US$ billion)

A comprehensive review2023
Average of the projected
2024 globalPartners
economic growth
(Percent of totalfor 2025
2015-19 intra-African trade)
Q1-3 Q1-4 Q1-3 Q1-4 C.AF. E.AF. N.AF. S.AF. W.AF.

Exports
Central Africa 10.9 6.5 8.7 9.4 10.6 37 35 2 23 3
Eastern Africa 13.1 14.1 19.1 16.1 23.3 15 55 4 24 1
Northern Africa 10 12.6 16.9 13 20.6 3 12 65 2 19
Southern Africa 25.8 21.7 29.5 22.5 35.9 7 34 1 52 5
Western Africa 23.5 16.7 23.2 18.8 28.8 4 0 2 33 61
Imports
Central Africa 8.2 5.9 7.7 5.2 8.8 32 17 12 25 14
Eastern Africa 14.8 15.1 20.6 16.2 23.6 2 36 8 50 3
Northern Africa 12 6.8 9.3 7.2 10.6 4 8 77 5 6
Southern Africa 20.9 13.9 19.4 16.4 22.3 4 7 2 69 18
Western Africa 11.1 15.9 21.5 15.7 24.6 2 1 14 8 75

Sources: International Monetary Fund (IMF), Direction of Trade Statistics (DOTS), December 2024; Afreximbank Research. Note: Q1–3 refers to
the first three quarters of the year. Data for 2024 (Q1–4) are estimates based on IMF DOTS data and calculations by Afreximbank for the fourth
quarter. These data exclude trade in services. Partner shares are calculated using IMF DOTS data. Abbreviations: C.AF.: Central Africa; E.AF.:
Eastern Africa; N.AF.: Northern Africa; S.AF.: Southern Africa; W.AF.: Western Africa.

22

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 indicates that the most significant growth will be concentrated in Africa. As
shown in Figure 29, nearly 80% of African economies are expected to achieve a
GDP growth of at least 3% in 2025, compared to 60% globally. Furthermore,
V. Macroeconomic Outlook A comprehensive review of the projected global
41% ofOutlook
1.Growth African economies are anticipated to experience
economic realindicates
growth for 2025 GDP thatgrowth of at
the most
significant growth will be concentrated in Africa. Nearly
Despite
least rising
5%,global uncertainty,
double Africa’s growth
the global is
proportion 80%21%.
of of African economies
Africa are expectedto
is expected to achieve
lead to
expected to accelerate significantly compared with a GDP growth of at least 3% in 2025, compared with
the global average starting in 2025. In 2024, Africa’s 60% globally (Figure 29). Furthermore, 41% of African
growth dynamics in the coming years. Table 4 illustrates that Africa is projected
GDP growth was estimated to be 3.4%, slightly economies are anticipated to experience real GDP
above the global rate of 3.2%, with more substantial
to account for 54% of economies with agrowth
growth anticipated from 2025 onward (Figure 28).
growth of at least 5%, double the global proportion of
rate exceeding 5% in 2025, a
21%. Africa is expected to drive growth dynamics in
In 2025, expected growth is set to rise to 4.0%, just the coming years. It is projected to account for 54% of
rise of 13 percentage points from 2024. economies
below the average for emerging economies and 0.8
Additionally, the continent is expected
with a growth rate exceeding 5% in 2025,
percentage points above the global average. By 2026, a rise of 13 percentage points from 2024 (Table 4).
to represent
growth is projected nearly half approaching
to reach 4.1%, of the world’sthe top performers in GDP growth in 2026
Additionally, the continent is expected to represent
4.2% average for emerging economies. By 2027, nearly half of the world’s top performers in GDP growth
and is2027,
Africa accounting
anticipated to achieve afor 49%
growth ratein
of both
4.2%, years.
in 2026 and 2027, accounting for 49% in both years.
exceeding both the average for emerging economies
and the global average.
Figure 29: Real GDP Growth (Annual Percentage Change, 2025)
Figure 29: Real GDP Growth (Annual Percentage Change), 2025

Sources: International Monetary Fund, World Economic Outlook, October 2024; Afreximbank Research.
Source: IMF, World Economic Outlook, October 2024 and Afreximbank Research.

Table 4: Ratio of Top Growth Performers

Region Number of countries with growth rate above 5%

2024 2025 2026 2027

World 41 39 37 39

Africa 17 21 18 19

Africa/World ratio 41 54 49 49
(Percent)

Source: Authors’ calculation based on the International Monetary Fund’s World Economic Outlook data, October 2024, and Afreximbank Research.

23

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Eastern Africa is expected to lead in economic growth on the continent, with
All African regions are expected to see an improvement growth shift from 4.1% in 2024 to 4.4% in 2025,
GDP growth projected to increase from
or to avoid setbacks in GDP growth starting in 2025
4.4% in 2024 to 5.7% in 2025. This
followed by a stabilization of approximately 4.2% for
(Figure 30). 2026 and 2027. This forecast is significantly shaped by
region is anticipated to maintain strong positive momentum, within Nigeria,
developments GDP growth
where GDPexceeding
growth
Northern Africa is anticipated to achieve robust
is anticipated to rise to 3.4% in 2025, driven by the
6.0% by 2027. A significant change in the
economic growth, with GDP projections pointing dynamics
implementation of theeconomic
of ongoing eastern region
reforms. The is the
to growth acceleration to 3.8% in 2025 from 3.2%
region's growth trajectory is likely to exhibit common
in 2024, eventually reachinga 4.1% in 2026 before
expectation that the Sudanese economyimprovements,
stabilizing in 2027. This upward trajectory is largely
will stabilize after
albeit with somerecovering from the
notable exceptions.
Benin is projected to stabilize at a sustained level of
influenced by improved economic conditions in Egypt,
impacts
Morocco, andof internal
Tunisia. conflict.
The resurgence is driven by
around 6%, while Niger is facing a considerable decline,
with a reduction in growth by three percentage points.
a recovery in the services sector, with significant
Additionally, The Gambia is expected to experience
contributions from trade and tourism activities.
stagnation but maintain growth greater than 5%.
In Southern Africa, economic growth is projected to rise
Western
by Africa's
0.4 percentage economic
points, reaching 2.6% byprojections
2025 and indicate
Although a isgrowth
caution shift
still advisable, from 4.1% in
two factors
contribute to the anticipated improvement in African
3% by 2027. This growth is expected to be common,
2024
with to exceptions
notable 4.4% inbeing 2025,
Eswatinifollowed by a economies.
and Mauritius.
First, the
stabilization ofrecovery in global demand,
approximately 4.2% for
especially for African exports, is expected to boost
The primary contributors to this growth trajectory are
economic growth. Second, declining inflation rates
2026 and
Botswana 2027.each
and Zambia, This forecast
of which is significantly
are expected to shaped
in many African by will
countries positive developments
enhance private
account for an increase of 1.4 percentage points in the
consumption and increase business competitiveness.
in Nigeria,
overall where
performance of the GDP
region. growth is anticipated to rise to 3.4% in 2025, driven by
Stabilizing public finances in some countries will
Central Africa is projected to experience a modest foster better resource management and encourage
the increment
growth implementation of toongoing
from 3.9% in 2024 4.2% in 2025,economic reforms. Furthermore,
productive investments. The region'srenewed growth
with growth rates anticipated to fluctuate through access to international capital markets and the
trajectory
2027. is likely
This optimistic to for
projection exhibit common improvements,
2025 is broad- albeitreforms
implementation of structural withtosomediversifynotable
based, excluding Equatorial Guinea and the Republic of economies and strengthen infrastructure will be
Congo, where growth
exceptions. prospects
Benin are set to diverge
is projected to from
stabilize
crucialat a drivers
to the sustained level
of growth. of climate
However, around 6%,
the regional trend. shocks and political instability must be addressed to
sustain this positive momentum.
while Niger is facing a considerable decline, with a reduction in growth by three
Eastern Africa is expected to lead in economic growth
on the continent, with GDP growth projected to 2. Disinflationary Process
percentage
increase from 4.4% points. Additionally,
in 2024 to 5.7% in 2025. This The Africa
Gambia isto gradually
is expected expected recovertofromexperience
the
region is anticipated to maintain strong momentum,
high inflation experienced post-pandemic, although
with GDP growth exceeding 6.0% by 2027. A significant
stagnation but maintain growth above 5%.
change in the dynamics of the eastern region is the
inflation rates will vary significantly across its regions
(Figure 31). The average inflation rate for Africa is
expectation that the Sudanese economy will stabilize
projected to decrease from 19.3% in 2024 to 14.8%
after recovering from the impacts of internal conflict.
in 2025. This trend is anticipated to continue because
Western Africa's economic projections indicate a inflation is expected to dip below the single-digit

Figure 30: Real GDP Growth (Percent), by African Region, 2024–2027

Figure 30: Real GDP Growth (Percent), by African Regions, 2024–2027

Source:
Sources: IMF World
International Economic
Monetary Outlook
Fund’s World Economic databases
Outlook and
databases and Afreximbank
Afreximbank Research,
Research, 2024. 2024.

24

Although caution is still advisable, two factors contribute to the anticipated

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threshold in 2026 and 2027, with forecasts of 10.5% a cumulative reduction in inflation of approximately
and 9.1%, respectively. 9.6 percentage points. In comparison, Ethiopia is
expected to see a decrease of around 9 percentage
In Northern Africa, inflation is predicted to decline by points during the forecast period. Additionally, after a
4.8 percentage points, reaching 13.6% by 2025. This prolonged period of hyperinflation, Sudan’s inflation is
trend is expected to persist, with further reductions projected to stabilize and return to more manageable
forecasted at 8.4% in 2026 and 7.2% in 2027. The levels.
primary factor driving this disinflationary trend is
a significant decrease in prices in Egypt, which is In Southern Africa, a sustained disinflationary
anticipated to result in a cumulative reduction of 19.1 trend is projected, with inflation rates expected to
percentage points over the three-year projection decrease from 20.1% in 2024 to 18.8% in 2025. This
period. decline is anticipated to continue, with rates falling
to 15.7% in 2026 and 14.7% in 2027. Notably, Angola
Central Africa is expected to see a significant decline is forecasted to achieve a cumulative reduction in
in inflation rates, decreasing from 8.4% in 2024 to inflation of approximately 15.6 percentage points.
4.6% in 2025. This downward trajectory is expected Malawi’s inflation is expected to decrease significantly
to continue with rates falling to 4.3% in 2026 and to by some 18.7 percentage points. Zimbabwe is poised
4.1% in 2027. The Democratic Republic of the Congo’s for a substantial contraction of approximately 32.2
effective control of inflation is the main driver of this percentage points over the forecast horizon.
decline, contributing to an aggregate reduction of 9.9
percentage points from 2024 to 2027. 3. Improving Fiscal and External Positions

In Western Africa, inflation is also expected to Fiscal consolidation measures, alongside growth
decrease significantly, with a projected drop of 5.7 projections, are anticipated to enhance the fiscal
percentage points, bringing the rate to 15.7% in 2025. landscape across Africa. All regions except Central Africa
This decline is anticipated to stabilize at 11.1% in are expected to show improvements. The continent’s
2026, followed by a further reduction to 9.3% in 2027. average fiscal deficit is projected to decrease from
Key economies such as Ghana, Nigeria, and Sierra 5.8% of GDP in 2024 to 5.4% of GDP in 2025, eventually
Leone are forecasted to substantially reduce inflation reaching 4% of GDP by 2027 (Figure 32).
rates by 14.6, 16.7, and 27.8 percentage points, In North Africa, the fiscal deficit is forecasted to
respectively. decline from 8.6% of GDP in 2025 to 5.6% of GDP by
Eastern Africa is expected to experience a significant 2027. Key economies such as Algeria, Egypt, and Libya
decline in inflation rates, with estimates showing are expected to substantially reduce fiscal imbalances,
a decrease from 20.9% in 2024 to 14.9% in 2025. with projected improvements of 2.1, 4.5, and 4.4
This downward trend is expected to continue, with percentage points, respectively.
inflation anticipated to decline to 10.5% in 2026 and The fiscal situation in South Africa is expected to
8.6% in 2027. Notably, Burundi is projected to achieve stabilize; the country’s projected deficit is 4.1% of GDP

Figure 31: Inflation (Percent), by African Region, 2024–2027

Figure 31: Inflation (Percent), by African Regions, 2024–2027

Sources: International Monetary Fund’s World Economic Outlook databases and Afreximbank Research, 2024.
Source: IMF World Economic Outlook databases and Afreximbank Research, 2024.

25

3. Improving Fiscal and External Positions

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 in 2025 and 3.3% of GDP in 2027. Malawi, Mozambique, Republic and the Democratic Republic of the Congo.
Zambia, Zimbabwe, and South Africa are expected to
Africa’s public debt as a percentage of GDP is expected
implement stringent fiscal consolidation, achieving
to decline as economic growth improves and fiscal
improvements of 6, 3.9, 3.5, 2.8, and 1.1 percentage
consolidation efforts strengthen. Africa’s debt-to-
points, respectively, over the forecast period. Notably,
GDP ratio, estimated at 67.2% of GDP in 2024, is
Botswana is predicted to shift from a consistent deficit
projected to decline to 65% of GDP in 2025, 61.9% of
to a budget surplus of 0.5% of GDP by 2027, with
GDP in 2026, and 60.6% of GDP in 2027, due to fiscal
Seychelles expected to achieve a similar transition to
consolidation efforts (Figure 33).
a surplus of 0.2% of GDP within the same timeframe.
Conversely, due to increased planned expenditures, All regions, except for Western Africa, are anticipated
Angola’s fiscal buffers are projected to remain to experience reductions in their debt-to-GDP ratios
unchanged at 1.6% of GDP from 2024 through 2027. (Figure 33).
Lesotho’s fiscal buffers are also set to decline from
In Northern Africa, projections indicate a gradual
5.2% of GDP in 2024 to 0.8% by 2027. This drop is
decline in the debt-to-GDP ratio, decreasing from
attributed to heightened spending commitments.
77.7% of GDP in 2024 to 76.1% of GDP in 2025,
In Eastern Africa, the fiscal deficit is set to decrease followed by further reductions to 69.2% of GDP
from 3.5% of GDP in 2024 to 3.1% in 2025 and in 2026 and reaching 66.8% of GDP by 2027.
to further decline to 2.6% by 2027. Despite Notably, Egypt is expected to achieve the region’s
unfavorable developments in Ethiopia and Sudan, this most significant reduction, with a decrease of
improvement is shared across the region. 19.6 percentage points over the forecast period.
Conversely, Algeria and Tunisia are projected to
Western Africa’s fiscal deficit is anticipated to fall from
experience incremental increases in their debt ratios,
4.5% of GDP in 2024 to 3.8% in 2025 and to stabilize
rising by 2.5 and 1.4 percentage points, respectively,
at 3.6% by 2027. This trend of fiscal improvement
during the same time frame.
applies to most countries in the region, with the
notable exception of Mauritania. Debt projections for Central Africa suggest a decrease
to 38.7% of GDP in 2025, with further reductions
In contrast, Central Africa is projected to experience a to 35.3% of GDP in 2026, followed by an eventual
continued deterioration in fiscal positions, with deficits increase to 42.4% of GDP in 2027. Key contributors
expected to widen from 0.9% of GDP in 2024 to 1.3% to fiscal consolidation within this region include São
of GDP in 2025 and to 1.6% of GDP in both 2026 Tomé and Príncipe, Gabon, the Republic of Congo, and
and 2027. This fiscal decline is common among most Cameroon, which collectively forecast reductions in
countries in the region, apart from the Central African debt levels of 7.1, 17.6, 10.4, and 18 percentage points

Figure 32: Fiscal Balance (Percent of GDP), by African Region, 2024–2027

Figure 32: Fiscal Balance (Percent of GDP), by African Regions, 2024–2027

Sources: International Monetary Fund’s World Economic Outlook databases and Afreximbank Research, 2024.
Source: IMF World Economic Outlook databases and Afreximbank Research, 2024.

26

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 Figure 33: Public Debt (Percent of GDP), by African Region, 2024–2027
Figure 33: Public Debt (Percent of GDP), by African Regions, 2024–2027

Sources: International Monetary Funds’ World Economic Outlook databases and Afreximbank Research, 2024.
Source: IMF World Economic Outlook databases and Afreximbank Research, 2024.
of GDP, respectively, over the three-year projection In contrast, debt ratios are expected to increase in
period. In contrast, Equatorial Guinea is expected to Botswana, Mauritius, and South Africa, indicating
diverge from
Despite this trend, with
regional its debt burden
differences, projected
Africa’s diverging account
current regional fiscaldeficit
trajectories.
is expected to
to rise by 12.4 percentage points of GDP during the
In Western Africa, public debt is projected to stabilize
same interval.
improve in 2025. In 2025, Africa’s current account
at approximately 50% deficit is the
of GDP during expected
forecast to
In Eastern Africa, the debt-to-GDP ratio is projected period due to Nigeria’s steady debt levels, which are
improve
to decreaseslightly toGDP
to 66.6% of 2.0% ofand
in 2025 GDP from 2.4%
to stabilize of GDP
expected in 2024,
to remain at 45% ofbut it may return to
GDP.
at 64.1% of GDP in both 2026 and 2027. Notably, this Despite regional disparities, Africa’s overall current
2.4%
analysisof GDPSudan,
excludes by which
2027has(Figure 34). Due account
been significantly to Algeria
deficit isand Libya's
expected rising
to improve imports,
slightly to 2.0%
impacted by conflict. The primary contributors to of GDP from 2.4% of GDP in 2024, but it could return
Eastern Africa’s debt-to-GDP ratio reduction are
Northern Africa is expected to reduce itstofiscal
anticipated to include Burundi, Djibouti, Ethiopia,
2.4% of deficit
GDP by 2027 to (Figure
2% of 34).GDP by 2025
Due to Algeria
and Libya’s rising imports, Northern Africa is expected
Kenya, Tanzania, and Uganda, with respective
and then rise slightly to 2.5% by 2027.
decreases of 3.4, 12.8, 9.1, 4.5, 3.6, and 3.1 percentage
In contrast,
to reduce Egypt
its fiscal deficit to 2% ofisGDP projected
by 2025; thatto
deficit is expected to rise slightly to 2.5% by 2027. In
points of GDP during the forecast period. Conversely, contrast, Egypt is projected to improve its external
improve
an increase its external
in the financial
debt ratio is expected inposition.
both Southern Africa's current account deficit
financial position. Southern Africa’s current account
Comoros and Rwanda. deficit may widen marginally to more than 2.2% of GDP
may widen marginally to over 2.2% of GDP in 2025. Central Africa's deficit is
in 2025. Central Africa’s deficit is predicted to escalate
In Southern Africa, the debt-to-GDP ratio is projected
to decrease to 68.9% of GDP by 2025, down from 71% from 1.9% in 2024 to 2.8% by 2027 due to challenges
predicted to escalate from 1.9% in 2024 in
in 2024; it is anticipated to decline to 68% in 2026 and
toGabon
2.8% andby
the 2027,
Republic driven
of Congo. by challenges
Eastern Africa’s
66.8% in 2027. Key contributors to this debt reduction deficit should gradually decline from 4.5% in 2024 to
ininclude
Gabon and
Angola, the Malawi,
Lesotho, Republic ofand
Namibia, Congo. Eastern Africa’s
about 4.2% from 2025deficit should gradually
to 2027. Meanwhile, Western
Zimbabwe, which collectively account for reductions Africa’s deficit is set to grow from 0.4% in 2024 to
decline
of 30.7, 7.2,from 4.5%
7, 5.3, and in 2024points
8.3 percentage to ofabout 4.2% from
1.44% by 2025
2027 due to 2027.
to Nigeria’s Meanwhile,
shift from surplus to
GDP, respectively, throughout the forecast period. deficit amid rising import needs.
Western Africa's deficit is set to grow from 0.4% in 2024 to 1.44% by 2027,
due to Nigeria's shift from surplus to deficit amid rising import needs.

27

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Figure
Fig34:
urCurrent
e 34: CAccount
urrent Balance
Accoun(Percent ofeGDP),
t Balanc (PercbyenAfrican
t of GRegion,
DP), by2024–2027
African Regions, 2024–2027

Sources: International Monetary Funds’ World Economic Outlook databases and Afreximbank Research, 2024.
Source: IMF World Economic Outlook databases and Afreximbank Research, 2024.
VI. Trade Outlook gain momentum following near stagnation in 2023.
However, the outlook remains biased toward the
Risks to the global economy, particularly concerning
downside, with significant vulnerabilities, including
global trade, are becoming increasingly evident. In the
the potential escalation of trade disputes, slower-
baseline scenario, global trade in goods—the total of
than-expected global growth, and risks of financial
exports and imports measured in current U.S. Vdollars—
I. TRADinstability
E OUTLO inOmajor
K economies.
is expected to grow in 2025, remaining stable and
fluctuating annually between 4% and 5.5% through African trade is projected to experience considerable
2028 (Figure 35). Estimates for 2025 suggest that growth, with an average annual increase of 5.1%
global trade will reach approximately US$52.2 trillion, anticipated for 2025 and 2026, escalating to 5.4%
As we enter 2025, the risks to
resulting in a relatively stable global trade-to-GDP
the global economy, particularly concerning
by 2028 (Figure 36). Total trade on the continent is
ratio of 45.3%, compared with 45.6% in 2024. Over expected to hit US$1.5 trillion by 2025 and to rise to
global
the mediumtrade,
term, theare becoming
global trade-to-GDP increasingly
ratio is evident,
US$1.7 trillion inwith potential
the medium term. Asconsequences
trade outpaces
anticipated to hold steady while the overall trade value GDP growth, the trade-to-GDP ratio is forecasted to
looming
is onrisethe
forecasted to horizon.
gradually, reachingInUS$60
thetrillion
baselinegrowscenario,
to 51% in 2025 global trade
and 52.7% in The
by 2028. goods—the
IMF’s
by 2028. According to estimates from the October 2024 October 2024 estimates predict a median annual
total of exports
International Monetary Fundand imports
(IMF) measuredtrade
World Economic in volume
current USrate
growth dollars—is
of 4.6% from 2025 expected
to to
Outlook (IMF, 2024), global trade volume is projected 2028. Trade is expected to increase steadily across
grow
to inan2025,
grow at average remaining stable
annual rate of 3.3% from and
2024 fluctuating annually
all African regions. Northernbetween
Africa will4% andan5.5%
lead with
to 2028 (Figure 35). Advanced economies are expected estimated US$502 billion in trade in 2025 (34.1%),
through
to experience2028 (Figure
slower growth, 35). about
averaging Estimates
2.7% for
rising2025
to US$588 suggest
billion by that
2028. Western trade will
globalAfrica’s
annually. In contrast, emerging markets and developing trade, valued at US$287 billion in 2024, is projected
economies are expected to contribute a larger share to rise to US$302 billion in 2025 and to US$339 billion
reach approximately US$52.2 trillion, resulting
to the growth of trade volume, achieving a robust
in a relatively stable global trade-
by 2028. Southern Africa’s trade, valued at US$265
average annual growth rate of 4.2% even while facing a billion in 2024, is expected to grow to US$279 billion in
to-GDP international
challenging ratio of 45.3%,
landscape.compared to 45.6%
Despite persistent 2025 and in to
2024.
US$327Overbillion the medium
by 2028. term, the
Eastern Africa’s
geopolitical tensions, ongoing inflationary pressures, trade, valued at US$178 billion in 2024, is anticipated
global
and trade-to-GDP
fragmented ratio
global value chains is anticipated
impacting cross- to to hold
surpass steady,
US$200 billion while
betweenthe 2026overall
and 2027,trade
border trade dynamics, global trade is projected to reaching approximately US$219 billion by 2028.
value is forecasted to rise gradually, reaching US$60 trillion by 2028. According
to estimates from the IMF World Economic Outlook (October 2024), global
trade volume is projected to grow at an average annual rate of 3.3% from 2024
to 2028 (Figure 35). Advanced economies (AEs) are expected to experience
28
slower growth, averaging about 2.7% annually. In contrast, emerging markets
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Figure 35: Global Trade Outlook Figure 35: Global Trade Outlook
Value

Volume (Changes in%)

Sources:
Sources: IMF,Monetary
International WorldFund Economic Outlook
(IMF), World Economic (WEO,
Outlook October
(WEO), October 2024;2024),
Afreximbankand Afreximbank
Research. Research.
Notes: Panel 1 shows midpoint
estimates for goods trade, defined as the sum of exports and imports as a share of world output based on IMF WEO GDP forecasts. Panel 2
calculates
Notes:trade volume
Panel 1 growth
shows for midpoint
each group as estimates
a weighted export
forandgoods
import growth
trade,average,
definedwith weights
as the based on total
sum of goods trade from
exports and
2022 to 2024. AEs: advanced economies; EMDEs: emerging and developing markets.
imports as a share of world output based on IMF WEO GDP forecasts. Panel 2 calculates trade
volume growth for each group as a weighted export and import growth average, with weights
Figure 36: African Trade Outlook
Figur2022
e 36: to
Afr2024.
ican TrAEs
ade Outlook advanced economies, while
based on total goods trade from represent
EMDEs refer(a)
to Africa's
emergingtotal
andtrade
developing markets. (b) Regional dynamics

Sources:
Sources: IMF,Monetary
International WorldFund,Economic Outlook
World Economic (WEO,
Outlook, October October
2024; Afreximbank2024),
Research. and Afreximbank
Notes: Panels Research.
a and b present midpoint
estimates for Africa’s trade with the world and subregional trade performances, respectively. Trade refers to the sum of goods’ exports and
imports.
Notes: Panels a and b present midpoint estimates for Africa’s trade with the world and
subregional trade performances, respectively. Trade refers to the sum of goods’ exports and
imports. 29

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Intra-African trade is expected to grow even faster events pose significant threats to the African
than extra-African trade, with an estimated annual economic outlook.
growth rate of 6.6% over the 2025–2028 period (Figure • Concerns about trade wars, particularly regarding
37). Projections indicate that intra-African trade will China, the United States, Canada, Mexico, and
comprise 8% of the continent’s GDP by 2028, reaching Europe, are rising, which could negatively affect
US$261.4 billion, up from 7.5% in 2024. Central Africa, Africa’s economic outlook. President Donald
by capturing 12.2% of intra-African trade, is anticipated Trump’s election has heightened the risk of trade
to experience the highest growth rate at 12% annually, disruptions and decreased Chinese demand for
increasing its trade from US$19.4 billion in 2024 to African exports. The rise of far-right political
US$31.8 billion by 2028. Western Africa contributed parties in Europe may result in stricter immigration
25.3% in 2024, with trade rising from US$52.8 billion policies, limiting remittances from the African
to US$68.6 billion by 2028, representing a growth rate diaspora that many families depend on. This
of 6.8%. Southern Africa’s trade is projected to rise at a remittances reduction could slow consumption and
slower rate of 3.9%, increasing from US$58.1 billion in investment, potentially hindering economic growth
2024 to US$68.2 billion by 2028. Eastern Africa’s share in several African countries. In 2025 and beyond,
is expected to decline from 22.5% to 20.6%, growing global uncertainty is likely to continue, disrupting
from US$46.8 billion to US$53.9 billion. Northern Africa supply chains and hampering economic progress.
is projected to maintain a 15% share, with an annual
growth rate of 5.7% through 2028. • Unfavorable developments in commodity markets
could pose significant challenges to Africa’s
These prospects for African trade are underpinned economic outlook. The primary risk to this outlook
by regional initiatives, shifting global dynamics, and arises from the continent’s vulnerability to
the continent’s growing role in critical areas such as external shocks, such as volatility in commodity
sustainable development and the energy transition. prices and geopolitical tensions. The World Bank
African trade is expected to benefit from the relative forecasts a slight decline in commodity prices
stabilization of commodity prices, which will provide a for 2025 and 2026, although they will still be
more predictable environment for resource-dependent higher than 2019 levels (Figure 38). Additionally,
economies. a significant drop in oil or mineral prices could
VII. Risk Factors in the Outlook severely affect export revenues for several
countries, exacerbating their external economic
A balanced assessment of risks characterizes the positions.
outlook for African economies. On the downside,
potential challenges include the increasing • The dynamics of the Chinese economy pose
fragmentation of the global economy due to escalation a significant risk to Africa’s economic outlook
of trade tensions. Additionally, adverse developments because of strong trade ties. The IMF projects
in commodity markets, a deceleration in economic that Chinese growth will decline from 4.8% in
growth in China, growing political instability across 2024 to 3.6% by 2027. A slowdown in Chinese
several regions, and intensification of climate-related growth could diminish demand for African natural

Figure 37: Intra-African Trade Outlook

Figure 37: Intra-African Trade Outlook
(a) Intra-African trade (b) Regional dynamics

Sources:
Sources: IMF, Monetary
International World Fund,
Economic Outlook
World Economic (WEO,
Outlook, OctoberOctober 2024),
2024; Afreximbank and Afreximbank
Research. Notes: Panels a andResearch.
b present midpoint
estimates for intra-African trade and subregional performances, respectively. Trade refers to the sum of goods’ exports and imports.
Notes: Panels a and b present midpoint estimates for intra-African trade and sub-regional
performances.
30 Trade refers to the sum of goods’ exports and imports.

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 positions.

Figure 38: Commodity Price Projections (Index, 100: 2010)

Figure 38: Commodity Price Projections (Index, 100: 2010)

Source:
Source: Authors
Authors based onbased onCommodity
World Bank World Bank Commodity
Market Outlook Market
Report, 2025. Outlook Report, 2025.

 The including
resources, dynamics oil andof the Chinese
minerals, affecting economy
• posefactors
Positive a significant risk
for the African to Africa’s
economic outlook
export revenues. Moreover, because China is a include the ongoing relaxation of monetary and
significant source of foreign direct investment financial conditions, enhanced implementation
(FDI) in Africa, a downturn could result in reduced of AfCFTA, and a favorable progression in
investment, tighter credit restrictions, and commodity prices. Together, these elements could
increased pressure on African countries facing significantly bolster economic growth across the
rising debt to China. continent.
• Political instability and weak governance present • Easing monetary and financial conditions in
significant risks to economic growth in Africa. developed economies could benefit Africa. While
In 2025, ongoing conflict in the Democratic notable variations exist across jurisdictions, global
Republic of Congo and tensions from the M23 financial conditions remain largely accommodative
rebel movement may disrupt mining production (Figure 39). Major central banks worldwide plan
in areas such as the Great Lakes region. The to lower their policy interest rates in 2025. Rate
Sahel, particularly Mali, Burkina Faso, and Niger, is drops could enhance African economies’ access
experiencing increasing jihadist violence, resulting to global capital markets at more affordable
in insecurity and economic disruptions. If countries costs. By facilitating economic financing, such
were to exit ECOWAS, trade would be hindered, a development could support the downward
and the African Continental Free Trade Area trend of Africa’s debt ratio and strengthen the
(AfCFTA) would be threatened, raising business continent’s sustainability.
costs and limiting investments and undermining
• Despite various global challenges, effectively
regional integration.
implementing AfCFTA could significantly benefit
• The hottest year yet, 2024 was marked by Africa. This initiative aims to reduce intra-African
severe hurricanes, floods, and wildfires. Climate trade barriers, facilitating trade among African
change has emerged as a top global risk. The countries. By eliminating customs duties and
consequences of climate change pose challenges simplifying administrative processes, AfCFTA could
for Africa’s economic growth. African countries increase intra-African direct investment, enhance
are especially vulnerable to extreme weather productivity, and promote the establishment of
events, such as droughts, floods, and storms, regional value chains. Furthermore, heightened
which directly impact agriculture—a crucial sector investment in technology sectors, particularly
for many economies. An increase in the frequency fintech and telecommunications, creates new
and intensity of these events could result in a growth opportunities for African start-ups and
significant decline in agricultural production, fosters financial inclusion.
a slowdown in economic growth, and a rise in
poverty and inequality.

31

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Figure 39: Central Rates Forecasts, Major Central Banks, 2024–2025
Figure 39: Central Rates Forecasts, Major Central Banks, 2024-25

Source:
Source: Afreximbank
Afreximbank Research,
Research, Trading Economies.Trading Economies

• A positive shift in commodity prices could enhance Trade Area presents a valuable opportunity to enhance
export earnings and economic growth in Africa. In intra-African trade, increase investment, and promote
2024, the commodity market remains relatively regional integration. The expansion of key sectors,
 Abutpositive
stable, notable price increases
shift have been
in commodity such as
prices fintechenhance
could and digital technologies,
export earningscreates and
recorded for cocoa (123%), coffee (46%), and new opportunities for financial inclusion and local
gold (23%). This trend benefits Western African entrepreneurship, contributing to the development of
economic growth in Africa. In 2024,
countries, including Côte d’Ivoire and Ghana, which
the commodity market remains
a more diversified and resilient economy.
lead in cocoa production, by boosting their export
relatively
earnings. stable,
Ethiopia, Côte d’Ivoire,but notable price
and Cameroon increases
However, have
notable risks beentherecorded
accompany resilience in for
the region. Ongoing geopolitical tensions, reliance on
benefit from rising coffee prices, while Ghana,
cocoaFaso,
Mali, Burkina (123%),
and Southcoffee (46%),
Africa gain from and gold (23%). This trend benefits Western
commodity exports, and the adverse effects of climate
change pose significant threats to regional stability.
increased gold prices, propelled by global economic
African countries, including Côte d’Ivoire Political turbulence
and Ghana,in certainwhich
areas, internal
lead in conflicts,
cocoa
uncertainty.
and severe weather events—such as droughts and
VIII. Conclusion flooding—considerably hinder the economic outlook.
production and boost their exportFurthermore, earnings.managing
Ethiopia, Côte d’Ivoire, and
public debt and external
Africa stands out for its remarkable resilience in
deficits presents a critical challenge, increasing African
Cameroon
recent years. benefit
African economies from rising
are navigating a coffee prices,
economies’ while toGhana,
susceptibility domestic Mali, Burkina
and global
complex global landscape characterized by significant
shocks.
transitions, ongoingand
Faso, challenges,
South and Africa
new growth gain from increased gold prices, propelled by
opportunities. In 2024, the continent recorded a slight African governments should implement ambitious
GDP increase despite external and internal pressures. economic reforms to fully capitalize on growth
global economic uncertainty.
Domestic consumption and the services sector played a opportunities. Policymakers must consider
crucial role in this relative stability, though dependence comprehensive policy recommendations tailored
on natural resource exports leaves African economies to each country’s circumstances and time frame.
highly exposed to global volatility. High inflation and Strategic priorities should include diversifying
rising fiscal deficits remain significant obstacles, but economies, enhancing governance, investing in
signs of recovery are emerging, with improved growth infrastructure, and strengthening intra-African trade.
prospects expected from 2025 onward.
VIII. CONGiven
CLUcurrent
SION geopolitical conditions, strategic
In this precarious global context, Africa’s outlook measures are essential for improving economic
is bolstered by several factors. Demand for African stability and adaptability to crises. Diversifying trade
exports, an anticipated decline in inflation, and relations to reduce dependence on dominant partners
economic reforms aimed at diversifying economies such as China could bolster the resilience of African
Africa stands out for its remarkable
and improving governance are expected to facilitate
resilience in recent years. African
economies. Similar considerations should apply
a recovery in growth. The African Continental Free to climate challenges; policymakers must develop
economies are navigating a complex global landscape characterized by
significant transitions, ongoing challenges, and new growth opportunities. In
32
2024, the continent recorded a slight GDP increase despite external and internal
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appropriate financial instruments, such as disaster creating opportunities for the private sector to thrive.
insurance, to assist countries most vulnerable to African governments should encourage intra-African
droughts, floods, and other extreme weather events. production by providing tax incentives to companies
that manufacture goods intended for trade within
Policymakers should support the factors driving
the African market. Additionally, they should enhance
African resilience: domestic consumption and the
local value chains by prioritizing public contracts for
services sector. They should implement strategies
African companies and promoting local consumption.
to increase household spending, particularly by
Moreover, it is essential for African countries to
enhancing social transfers to low-income families.
actively work toward implementing the African
Given the substantial growth of the services sector,
Union’s protocol on free movement; doing so could
it is vital to promote digital initiatives that support
significantly improve the efficiency of regional trade.
technology start-ups and the development of digital
Investing in and developing strong transport, storage,
skills, thereby fostering innovation and boosting the
and logistics infrastructures is crucial. Strengthening
competitiveness of the African digital economy.
and modernizing the connectivity of ports, airports,
Proactive monetary policy and targeted safety nets and road networks will facilitate trade among
are crucial for economic resilience. As African central African countries. These measures are essential for
banks tighten policies to combat inflation, adopting streamlining intra-African trade, ultimately leading to
strategies that manage inflation without stifling greater economic integration and competitiveness.
growth is critical. This effort may involve lowering
Navigating the unique challenges and opportunities
interest rates in countries where inflation stabilizes
in 2025 is critical. In an increasingly uncertain global
and enhancing social safety nets to protect vulnerable
landscape, Africa stands at a pivotal juncture. By
populations while supporting local private sectors.
implementing robust economic policies and fostering
Several key factors should be prioritized to support deeper regional integration, the continent has the
trade integration in Africa, notably through AfCFTA potential to address its existing challenges and to
and infrastructure development. Implementing establish itself as a significant contributor to global
AfCFTA protocols and reducing customs barriers will economic growth in the years to come.
accelerate trade integration across the continent,

33

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 Appendix

Table 5: Countries by Regions

34

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Table 6: Countries by Economic Groups

Note: Eritrea, Somalia, and South Sudan are excluded due to data unavailability.

35

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Downloaded By muazuahmadmuazu4@gmail.com from 10.11.47.196 at 2025-06-30 09:10:38 - UTC. Unauthorized Distribution Prohibited.
 Chapter 2: Challenges Of African Economic Sustainability
In An Uncertain Landscape

Key messages

• Over the past two decades, Africa has been one of the fastest-growing
regions globally, but its growth has been unstable due to dependence on
volatile commodity exports.

• African countries struggle with economic diversification, which affects their

ability to sustain sovereign debt. The surge in sovereign debt is fueled by
infrastructure financing needs and a low-interest rate environment since
the 2008–2009 financial crisis and is worsened by the fiscal impacts of the
COVID-19 pandemic.

• Africa faces challenges with underdeveloped human capital (despite

economic growth in the last two decades), low poverty reduction, and
increasing income inequality.

• African countries must address rising concerns about environmental

degradation and extreme weather events, which increasingly impact their
economies.

• African countries should focus on structural transformation, efficient

public spending, skill development, poverty reduction, and environmental
protection to achieve inclusive and sustainable growth.

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I. Introduction financial crisis, facilitated the issuance of Eurobonds
by several African countries at relatively lower costs,
Emerging uncertainties and the growing geo-
albeit still higher than those faced by industrialized
fragmentation of the global economy jeopardize
counterparts. However, the burden of sovereign debt
the resilience of the African continent. Despite
has been exacerbated by fiscal measures deployed to
experiencing significant growth in recent years,
address the economic ramifications of the COVID-19
socioeconomic outcomes, including poverty rates and
pandemic, raising significant concerns regarding debt
levels of inequality, remain below optimal thresholds
sustainability across the continent. These concerns
while vulnerabilities have risen due to inadequate
have been amplified by the global tightening of
diversification. Enhancing resilience and promoting
monetary policies to control inflation, which is driven
sustainable development frameworks is crucial,
by demand-supply imbalances resulting from pandemic
especially in the medium to long term.
recovery efforts and the ongoing Russia-Ukraine war.
Over the past 25 years, Africa has experienced rapid
The third section focuses on human capital and skills
and volatile economic growth alongside significant
development, evaluating their roles in contributing to
population increases. From 2000 to 2024, the
structural transformation and facilitating economic
continent’s average economic growth was about 3.7%
diversification.
per year, but growth per capita has been modest,
not exceeding 1.3% annually. This economic growth The fourth section assesses the challenges African
has been inconsistent due to structural challenges countries face in enhancing the effectiveness of
and overlapping crises; many economies depend on growth as a tool for alleviating poverty and reducing
primary commodity exports while importing essential inequality.
food products. Recent global challenges, such as the
The fifth section investigates obstacles to achieving
COVID-19 pandemic and the Russia-Ukraine war that
green growth and effectively managing climate-
began in 2022, have intensified this vulnerability.
induced shocks.
Moreover, climate-related disasters, including floods
and droughts, have further contributed to economic Finally, the chapter concludes with policy
fluctuations over the past two decades, heightening recommendations to address these challenges, thereby
Africa’s susceptibility to extreme weather events. enabling African economies to transition toward more
inclusive and sustainable growth trajectories.
Despite recent economic growth, sub-Saharan Africa
still faces high poverty rates and inadequate progress II. Macroeconomic Instability and the Lack of Economic
in health and education. The region remains one of the Diversification
most inequitable in the world, underscoring the need
1. Macroeconomic Stability
for targeted interventions. Developing human capital
and promoting skills development are essential for In the past two decades, Africa has demonstrated
facilitating structural transformation and achieving significant economic growth, becoming one of the
economic diversification across the continent. world’s fastest-growing regions. From 2000 to 2009,
Furthermore, there are growing concerns about the sub-Saharan Africa achieved an average annual
increasing frequency of extreme weather events, growth rate of 5.3%, compared with 4.6% in Northern
which pose significant challenges and contribute to Africa (Table 7). In comparison, emerging markets
economic volatility, undermining social progress in and developing economies grew at an average rate of
African economies. Addressing these issues is crucial 5.8%, significantly outpacing advanced economies,
for achieving sustainable development and resilience in which grew at just 1.8%. However, during the 2010s,
the region. Africa experienced a slowdown in economic growth.
sub-Saharan Africa’s average economic growth rate
This chapter examines key dimensions for enhancing
fell to 4.1%, while Northern Africa’s decreased to
resilience and promoting sustainability within African
2.9%. Meanwhile, emerging markets and developing
economies. The initial section addresses the continent’s
economies grew at 4.5%, and advanced economies
macroeconomic instability, resulting from a confluence
increased by only 2%. From 2020 to 2024, the
of overlapping shocks. It highlights the critical issue of
COVID-19 pandemic further disrupted economies,
economic diversification, a significant contributor to
leading to a decline in Africa’s economic growth, which
this instability and to the non-inclusiveness of growth
dropped below 3%. During the same period, emerging
patterns observed across the region.
markets and developing economies grew at 3.4% and
The second section delves into the sustainability advanced economies at 1.6%.
of sovereign debt. Over recent decades, numerous
Africa’s per capita economic growth fell from 2.5%
African governments have accrued substantial debt
in the 2000s to 0.4% post-pandemic. Since 2010,
levels to fulfill infrastructure development needs
per capita growth rates in African economies have
and mitigate the adverse effects of climate-related
been among the lowest, highlighting the continent's
shocks. Favorable conditions in a low-interest rate
failure to sufficiently leverage its demographic
environment, stemming from the 2008–2009 global
dividend, which reflects the opportunity represented

38

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by its larger working-age population. This inability Botswana, similarly experienced heightened growth
to exploit the demographic window of opportunity volatility. Moreover, the COVID-19 pandemic severely
accounts for the challenges African economies face disrupted tourism, resulting in significant fluctuations
in achieving inclusive growth. This situation results in per capita growth in countries such as Cabo Verde,
from weak economic diversification and a lack of Mauritius, and Seychelles.
skills development that aligns with market needs and
A noticeable pattern in the region suggests that
potential.
increased volatility correlates with more significant
During the 2010s, African economies exhibited the fluctuations in inflation rates, particularly in resource-
highest volatility in global GDP per capita growth dependent economies (Figure 41). This observation
rates (Figure 40). This volatility is attributed to the aligns with the Dutch disease phenomenon, wherein a
continent’s significant dependence on commodity boom in the resource sector contributes to a decline
exports, which are subject to price fluctuations, in non-resource tradable sectors such as agriculture
alongside a reliance on rain-fed agriculture that is and manufacturing, accompanied by a rise in domestic
particularly vulnerable to extreme weather events. prices and, consequently, a real exchange rate
Over the past decade, countries have heavily relied on appreciation. Price instability within the continent is
resource extraction, and those dependent on tourism further compounded by the fact that many African
have displayed pronounced per capita growth volatility. countries are net food importers. In the global
Specifically, between 2015 and 2014, Libya emerged as market, food imports have displayed pronounced
the most volatile economy due to its dependence on oil volatility. Recently, food prices have surged across
exports, coupled with ongoing political instability that various African economies, driven by demand-supply
began in 2011. Other oil-exporting countries, such as mismatches related to the pandemic and disruptions
South Sudan and Equatorial Guinea, along with non-oil stemming from the Russia-Ukraine war.
resource-intensive countries, including Sudan and

Table 7: Growth Rate and Its Volatility by Region, 2000–2024

Variables Regions 2000-09 2010-19 2020-2024

Mean of GDP Advanced economies 1.8 2.0 1.6

growth
Major advanced economies (G7) 1.4 1.9 1.5

Emerging markets and developing economies 5.8 4.8 3.4

Africa 5.0 3.6 2.6

Mean of GDP Advanced economies 1.2 1.6 1.3

per capita
growth Major advanced economies (G7) 0.8 1.5 1.2

Emerging markets and developing economies 4.3 3.4 2.5

Africa 2.5 1.1 0.4
Standard Advanced economies 2.1 0.6 3.7
deviation of
GDP per cap- Major advanced economies (G7) 2.1 0.5 3.7
ita growth Emerging markets and developing economies 2.0 1.0 3.4

Africa 1.0 0.9 2.5

Source: Calculations based on International Monetary Fund’s World Economic Outlook, October 2024. Note: Volatility is computed by the standard
deviation of the annual growth rate of real GDP per capita PPP over the corresponding period.

39

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 Figure 40: Volatility of GDP per Capita Growth of African Countries, 2015-2024

Figure 40: Volatility of GDP per Capita Growth of African Countries, 2015–2024
Figure 40: Volatility of GDP per Capita Growth of African Countries, 2015-2024
20.0
18.0
16.0
14.0
12.0
Volatility

10.0
8.0
6.0
4.0
2.0
0.0
Africa
Cameroon
Egypt
Gabon
Nigeria
Angola
Algeria
Congo
Chad
Equatorial Guinea
Suth Sudan
Libya
Tanzania
Burkina Faso
Central Afr. Rep.
Mali
Ghana
Guinea
Zambia
Congo, Demo. Rep.
South Africa
Sierra Leone
Niger
Liberia
Namibia
Zimbabwe
Botswana
Sudan
Togo
Comoros
Guinea-Bissau
Ethiopia
Malawi
Sao Tome & Principe
Senegal
Djibouti
Benin
Gambia
Burundi
Cote d’Ivoire
Kenya
Mozambique
Mauritania
Lesotho
Uganda
Swaziland
Somalia
Madagascar
Tunisia
Morocco
Rwanda
Mauritius
Seychelles
Cape Verde
Source: Calculations based on IMF World Economic Outlook (October 2024). Notes: The
volatility is computed by the standard deviation of the annual growth rate of real GDP per
All Oil exporters Other Resource intensive countries Non-resource intensive countries
capita PPP over 2015-2024. For Africa, the value is the unweighted average across
Source: Calculations
Source: Calculations based Monetary
based on International on IMFFund’sWorld Economic
World Economic Outlook,Outlook
October 2024. (October 2024).
Note: Volatility Notes:
is computed The
by the standard
countries.
deviation of the annual growth rate of real GDP per capita PPP over 2015–2024. For Africa, the value is the unweighted average across countries.
volatility is computed by the standard deviation of the annual growth rate of real GDP per
capita PPP over 2015-2024. For Africa, the value is the unweighted average across
Figure 41: Volatility of Inflation of African Countries, 2015–2024
Figure 41: Volatility of Inflation of African Countries, 2015-2024
countries.
14.0

12.0
10.0

8.0 Figure 41: Volatility of Inflation of African Countries, 2015-2024

Volatility

6.0

4.0
2.0

0.0
Africa
Congo
Gabon
Equatorial Guinea
Cameroon
Algeria
Chad
Nigeria
Angola
Egypt
Libya
Tanzania
South Africa
Guinea
Central Afr. Rep.
Niger
Botswana
Mali
Burkina Faso
Zambia
Liberia
Ghana
Congo, Demo. Rep.
Sierra Leone
Kenya
Lesotho
Eswatini
Benin
Djibouti
Uganda
Madagascar
Tunisia
Cote d’Ivoire
Somalia
Morocco
Togo
Cabo Verde
Mauritania
Guinea-Bissau
Senegal
Mauritius
Seychelles
The Gambia
Comoros
Rwanda
Mozambique
Sao Tome & Principe
Malawi
Ethiopia
Burundi

All Oil exporters Other Resource intensive countries Non-resource intensive countries

Source: Calculations
Source: Calculations based
based on the on Monetary
International the IMF World
Fund’s Economic
World Economic Outlook
Outlook, (October
October 2024. 2024).
Note: Volatility Notes:
is computed The
by the
standard deviation of the annual (Consumer Price Index-based) inflation rate over the period 2015–2024. For Africa, the value is the unweighted
volatility is countries.
average across computed by the standard deviation of the annual (CPI-based) inflation rate over
the period 2015-2024. For Africa, the value is the unweighted average across countries.
Source: Calculations based on the IMF World Economic Outlook (October 2024). Notes: The
volatility is computed by the standard deviation of the annual (CPI-based) inflation rate over
2. Lack of Economic Diversification
the period 2015-2024. For Africa, the value is the unweighted average across countries.

A significant factor contributing to the volatility of economic growth in African

2. Lack of Economic Diversification
countries is their heavy reliance on exporting natural resources. This reliance
can be illustrated using the Herfindahl-Hirschman Index (HHI), which measures
A significant factor contributing to the volatility of economic growth in African
40
export concentration. The HHI, as reported by the United Nations Conference on
countries is their heavy reliance on exporting natural resources. This reliance
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2. Lack of Economic Diversification The lack of export diversification in Africa is
A significant factor contributing to the volatility of underscored by the Economic Complexity Index (ECI),
economic growth in African countries is their heavy which reflects the diversity of a country’s exports
reliance on exporting natural resources. This reliance and the number of producing countries(Hidalgo &
can be illustrated using the Herfindahl-Hirschman Hausmann, 2009). In the 2022 ECI ranking of 145
Index (HHI), which measures export concentration. The countries, Tunisia ranks as the highest African
HHI, as reported by the United Nations Conference nation at 48th, followed by Mauritius and Eswatini
on Trade and Development (UNCTAD, 2024), ranges at 58th and 69th, respectively (Table 8). Nigeria, the
from 0 to 1. A value of 1 indicates the highest level continent’s fourth-largest economy, ranks poorly at
of export concentration (and the lowest level of 140th due to its heavy dependence on oil exports.
diversification); 0 signifies the lowest concentration The lowest positions in the ECI globally—occupied
(and the highest diversification). by African countries with Guinea, Congo, and Chad
at the bottom—highlight the continent’s lack of
From 2020 to 2023, Africa had the highest diversification. The limited diversification of African
concentration level globally, with an HHI of 0.20, economies significantly restricts the private sector’s
compared with only 0.06 for Europe (Figure 42). All job creation capacity, hindering its ability to harness
African economies had HHI values exceeding the the demographic window of opportunity and promote
G7 countries’ average of 0.10. Only seven African inclusive growth. Heavy reliance on raw material
countries—Djibouti, Tunisia, Egypt, South Africa, exports and a lack of local manufacturing capabilities
Mauritius, Morocco, and Kenya—reported HHI values lead to job generation predominantly concentrated in
below 0.20 (Figure 43). Eighteen economies on the the fossil fuel and mining industries and urban service
continent had concentration indices exceeding 0.50. sectors.
The countries with the highest concentration scores
were Botswana (0.85), Mali (0.82), and Angola (0.80), Furthermore, the increased macroeconomic
all heavily reliant on commodity exports. instability resulting from this lack of diversification
presents a crucial barrier to inclusivity across the

Figure 42: Export Concentration Index of Regions, 2020–2023

0.25

0.20

0.15
index

0.10

0.05

0.00
Europe Northern Asia South America Africa
America

Source: Calculations based on data from the United Nations Conference on Trade and Development, 2024. Note: For each country, the value is the
annual average over the period 2020–2023.

41

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 Figure 43:FExport
igure Concentration
43: Export Index
Concof
enAfrican
tratioEconomies,
n Index of2020–2023
African Economies, 2020-2023

Source: Calculations based on data from the United Nations Conference on Trade and Development, 2024. Notes: For each country, the value is
Source:
the annualCalculations based
average over the period on data from UNCTAD (2024). Notes: For each country, the
2020–2023.

value is the annual average over the period 2020-2023.

continent. The notable income volatility is driven by financing needs, significantly increasing their debt
fluctuating terms of trade that hamper investment. levels. This rise in sovereign debt has been supported
It stifles job creation, worsening levels of extreme by a low-interest-rate environment that followed the
The lackandof
poverty export
inequality, withdiversification
the most vulnerable in Africa is underscored
2008–2009 byThethe
global financial crisis. Economic
situation has
populations shouldering the brunt of shocks. The been further complicated by the fiscal costs of the
negative impacts of macroeconomic instability on COVID-19 pandemic, as well as by policies aimed at
Complexity
inclusiveness are Index (ECI),
particularly which
severe reflects
in Africa due to the diversity
protecting of apopulations
vulnerable country’s from exports and
food insecurity
the underdevelopment of its financial systems, which due to the Russia-Ukraine war. These factors raised
theinhibits
number
householdsof and
producing
businesses fromcountries
managing (Hidalgo and about
serious concerns Hausmann,
sovereign debt2009). In the
sustainability
economic shocks through adequate access to credit. across the continent. These concerns have been
2022
AfricanECI ranking
countries of 145
must effectively countries,
navigate into their Tunisia
exacerbated ranks as the
by tightening highest
of global African
monetary policy
to combat inflation resulting from demand-supply
product spaces to improve their economic complexity
nation
and achieveat more
48th, followed
diversified economies.by Mauritiusmismatches
For any
from the pandemic recovery and the
and Eswatini
Russia-Ukraine war.
at 58th and 69th,
country, the product space emphasizes diversification
respectively
options based on (Table 8). ofNigeria,
the similarity the continent’s
products linked fourth-largest
1. Rise of Sovereign Debt economy, ranks
to revealed comparative advantages (Hidalgo et al.,
Recent concerns regarding surging public debt
2007). Producing certain goods depends on existing
poorly at 140th due to its heavy dependence
capacities, making them easily reproducible from
on questions
levels raise critical oil exports. The lowest
about the relationship
between public debt and African economic growth.
similar products. Structural transformation and
positions in the ECI
economic diversification operate globally, occupiedTheoretically,
by reallocating by African the effects of public debt on economic
growth remain ambiguous.
countries, highlight the
resources to goods related to those already produced.
continent’s
This transformationlackandof diversification,
diversification are bolstered withIn the
Guinea,
short term,Congo, and
sovereign debt Chad
could stimulateat the
by enhancing energy and transport infrastructure and growth through a fiscal multiplier effect. In the
advancing science and technology education to meet long term, it could promote growth if allocated to
bottom. The limited diversification of African
local manufacturing needs.
economies significantly restricts
infrastructure investments that enhance private
sector productivity. However, public debt might
theIII. private sector’s
Sovereign Debt job creation capacity,
Sustainability hindering
hinder long-run growthits by
ability
requiringto harness
higher taxation the
In recent decades, African governments faced urgent to service that debt, ultimately reducing the savings
demographic window of opportunity and promote inclusive growth. The heavy
reliance on raw material exports and a lack of local manufacturing
42

capabilities leads to job generation predominantly concentrated in the fossil

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Table 8: Economic Complexity of African Economies, 2022

Country Index Rank Country Index Rank

Tunisia 0.30 48 Zambia -0.81 112

Mauritius 0.09 58 Madagascar -0.82 113

Eswatini -0.09 69 Botswana -0.87 115

Egypt -0.20 75 Zimbabwe -0.89 116

South Africa -0.21 76 Tanzania -1.00 120

Kenya -0.25 81 Cote d’Ivoire -1.01 122

Morocco -0.37 87 Libya -1.06 126

Niger -0.43 89 Togo -1.10 127

Angola -0.47 92 Mauritania -1.35 132

Rwanda -0.54 94 Cameroon -1.38 133

Namibia -0.55 95 Liberia -1.39 134

Uganda -0.57 96 Sudan -1.41 135

Burkina Faso -0.58 98 Gabon -1.48 136

Benin -0.60 99 Eq. Guinea -1.55 138

Senegal -0.67 101 Mozambique -1.55 139

Ghana -0.71 104 Nigeria -1.71 140

Malawi -0.71 105 Guinea -2.11 143

Algeria -0.72 106 Congo -2.18 144

Ethiopia -0.80 110 Chad -2.49 145

Mali -0.80 111

Source: Economic Complexity Index, https://atlas.hks.harvard.edu/rankings.

43

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rate. This phenomenon, in turn, leads to increased allocation to unproductive government expenditures,
sovereign risk, resulting in elevated interest rates that which is inefficient.
crowd out private investment. The crowding-out effect
An analysis of data from 2015 to 2024 indicates
is particularly pronounced in African economies and is
a significant positive correlation between the
attributed to their relatively underdeveloped domestic
investment rate and the sovereign debt-to-GDP ratio
financial markets.
(Figure 44, panel a). This correlation underscores
Evidence suggests that the relationship between debt the hypothesis that sovereign debt has been crucial
and growth varies across countries and is influenced in financing infrastructure projects. Specifically,
by both the debt level and institutions’ strength. an increase of 1 percentage point in the debt-to-
Generally, a weak positive association exists between GDP ratio is associated with an approximate 0.12
government debt and economic growth in countries percentage point uplift in the investment-to-GDP
with lower debt-to-GDP ratios, whereas countries ratio. However, the anticipated benefits of these
with higher ratios often experience adverse effects infrastructural investments have not resulted in a
(Reinhart & Rogoff, 2010). Despite African countries strong positive correlation between the debt-to-
exhibiting lower debt-to-GDP ratios than industrialized GDP ratio and real GDP per capita growth (Figure 44,
countries, the potential growth-enhancing effects of panel b). In fact, during this period, the relationship
public debt in African countries are limited by the low between real GDP per capita growth rates and debt-
quality of those countries’ institutions. Notably, while to-GDP ratios has been slightly negative. This finding
sovereign debt may be growth-neutral in countries aligns with the previously discussed challenges that
with strong institutional frameworks, it tends to impede the growth-enhancing capacity of public
be detrimental in those with weaker institutions debt, particularly in light of Africa’s significant annual
(Kourtellos et al., 2013). That’s because rising debt is population growth rate of 2.4.
associated with fund misappropriation and resource

44

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Figure 44: Investment and Growth Against Public Debt, 2015–2024

Source: Calculations based on data from International Monetary Fund’s World Economic Outlook, October 2024. Note: Data are averaged over the
period 2015–2024.

45

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2. Drivers of Sovereign Debt significant concerns regarding the sustainability of
public finances in African countries.
Since 2000, stock-flow adjustments have been the
primary driver of African sovereign debt dynamics 3. Reversal of the Interest Rate-Growth Differential
(Figure 45 and Appendix 1). These adjustments include
A significant shift in the composition of creditors
valuation effects, arising from fluctuations in exchange
parallelled the rise in African sovereign debt over recent
rates that impact foreign-denominated debt, as well as
decades. Notably, there has been a transition from
from “below-the-line” fiscal-financial operations such
traditional Paris Club lenders to Eurobond investors
as privatization receipts and changes in government
and China. In the past decade, the search for higher
deposit levels. In recent decades, interest payments
yields by foreign private investors in a low-interest-
and the primary balance have significantly contributed
rate environment enabled several African countries to
to the increasing debt burden across the continent.
issue Eurobonds at comparatively lower costs. However,
Growing dependence on external debt, exacerbated
these costs remain above those faced by more
by a surge in Eurobond issuances, has made African
industrialized countries. Chinese and private lending
countries more vulnerable to the consequences of
rates increased in the past 20 years while official credit
exchange rate depreciation, increasing the domestic
rates decreased (Table 9 and Figure 46). Specifically, the
currency value of their debt-servicing obligations.
average interest rates on official loans decreased from
Since 2006, declining inflation and growth rates have 1.11% in 2000–2009 period to 0.95% in 2015–2020
not prevented the debt-to-GDP ratio from rising. (Table 9). In contrast, the interest rates associated
Notably, even with historically low global interest with Chinese loans increased by approximately 0.89
rates over the past decade, the negative gap between percentage points, moving from 1.58% in the earlier
interest rates and economic growth has not been period to 2.47% in the later period. Remarkably, the
enough to stabilize the increase in the debt-to-GDP required interest rates from private creditors surged
ratio across the continent. Moreover, the recent significantly, escalating from 1.64% in 2000–2009
narrowing of this interest rate-growth differential, to 5.08% in 2015–2020—a dramatic increase of 3.44
which may trend toward positive territory, raises percentage points over this time frame.

Figure 45: Drivers of Sovereign Debt, 2000–2024

25
20
15
10
Percentage point

5
0
-5
-10
-15
-20
-25

Interest payments Real GDP growth rate

Inflation rate Primary balance

Stock flow Change in debt-to-GDP ratio

Source: Afreximbank Research.

46

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Table 9: Interest Rate by Type of Creditors

2000-2009 2010-2014 2015-2020

All 1.28 1.62 1.28

Official 1.11 1.39 0.95
Multilateral 0.96 1.25 0.90
Bilateral (excluding China) 1.52 1.68 1.07

China 1.58 2.03 2.47

Private 1.64 3.38 5.08
Source: Calculations are based on the African debt database compiled by Mihalyi and Trebesch (2022).

Figure 46: Interest Rate Trends by Type of Creditors, 2000–2020

7.0
Multilateral
6.0 Bilateral (excluding China)
Private
China
5.0
Interest rate (percent)

4.0

3.0

2.0

1.0

0.0
2000 2005 2010 2015 2020

Source: Calculations based on the African debt database compiled by Mihalyi and Trebesch (2022).

The upward trend in interest rates charged by Chinese risk premium, which increases the fiscal burden,
and private creditors aligns with growing concerns moving the interest rate-growth differential into
about the evolution of the interest rate-growth positive territory. This conjecture is supported by the
differential, which is critical for sovereign debt dynamics of the interest rate-growth differential in
sustainability (Appendix 2). A negative differential Africa over the past two decades (Figure 47). Although
creates a favorable snowball effect that supports debt it fluctuated, the differential showed an upward trend,
sustainability, whereas a positive differential hinders rising from double-digit negative values in the 2000s
it. Higher debt prompts investors to demand a higher to a positive value of 2.48% in 2020.

47

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Figure 47: Interest
FigRate
ure 4Growth
7: InterDifferential
est Rate G(Percent),
rowth Dif2000–2020
ferential (Percent), 2000-2020

Source: Calculations
Sources: Calculations based onbased
data fromon data from
International IMFFund’s
Monetary World Economic
World Outlook
Economic Outlook, (October
October 2024)Research. Note:
2024; Afreximbank
Data are averages over African countries for each year.
and Afreximbank Research. Note: Data are averages over African countries for each
year.
Empirical analysis indicates that the narrowing of 4. Persistence of External Imbalances
the interest rate-growth differential over the past
The increase in sovereign debt across Africa be
two decades has been positively associated with
attributed to persistent chronic fiscal deficits that
increased public debt (Table 11 in Appendix 2). On
Empirical analysis indicates that the
average, a 1 percentage point increase in the sovereign
narrowing
have lastedoffor the
severalinterest rate-growth
decades. Low national savings
mobilization and underdeveloped domestic financial
debt-to-GDP ratio led to a contraction in the interest
differential over the past two decades has
rate-growth differential by 0.17 to 0.30 percentage
been
markets worsenpositively associated
this situation, with
resulting in ongoing
account deficits for many years (Figure 48). Over the
points. This finding suggests that rising public debt
increased public debt (Table 11). On average,
contributed to a shift in the differential from a negative
past a
20 1years,
percentage point
the continent’s increase
average in
fiscal balance
has consistently shown a deficit. The one exception,
regime to a positive one. In other words, the debt-to-
the sovereign debt-to-GDP ratio led to between
GDP ratio and the interest rate-growth differential
a contraction
2005 and 2008,in the interest
was due to an oil rate-
boom
that significantly boosted government revenue.
are interconnected. Even though African countries
growth differential by 0.17 to 0.30 percentage
are currently in a negative (favorable) environment,
points.
The highest This
fiscal suggests
surplus, that 4.00%
reaching about risingof
GDP, was recorded in 2006. However, in 2020, fiscal
they must focus on debt sustainability. Notably,
public debt contributed to a shift in the differential
favorable differentials have not always resulted in debt
responses to from a negative
the COVID-19 regime
pandemic to a
led to the worst
public deficit-to-GDP ratio, which climbed to 5.37%.
reduction; instead, they have often been linked to
positive one. In other words, the debt-to-GDP
weaker fiscal consolidation, which offsets their positive
The currentratio
accountand thehas
balance interest
remained rate-
in deficit
over the last two decades. The lowest current account
effects on debt sustainability. African economies must
growth differential are interconnected. Evendeficit,
prioritize growth-oriented investment projects when
though we ofcurrently
at 0.19% GDP, occurredfind ourselves
in 2007 due to
higher oil prices. In contrast, during the oil price drop
managing fiscal policies.
in a negative (favorable) environment, it is crucial from 2014 for African
to 2016, countries
the current account todeficit
focus peaked
in 2015 at 7.27% of GDP.
on debt sustainability. Notably, favorable differentials have not always resulted
in debt reduction; instead, they have often been linked to weaker fiscal
consolidation, which offsets their positive effects on debt sustainability. African
economies must prioritize growth-oriented investment projects when managing
fiscal policies.
48

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Figure
Fig48:
ureFiscal
48: FBalance
iscal Baand
lancCurrent
e and CAccount
urrent ABalance
ccount (Percent
Balanceof
(PGDP),
ercen2000–2024
t of GDP), 2000-2024

Source: Calculations
Source: Calculations based onbased onInternational
data from data from IMF Funds’
Monetary WorldWorld
Economic Outlook
Economic Outlook, (October
October 2024) Research. Note: Data
2024; Afreximbank
are averages over African countries for each year.
and Afreximbank Research. Notes: Data are averages over African countries for each
Empirical research from 2000 to 2023 supports the
year. 1. State of Healthcare
twin deficit hypothesis (positive causal relationship Despite notable economic advancements over the past
between the fiscal balance and the current account two decades, numerous African countries continue
balance) in Africa (Annex 2.3). The evidence shows that to experience insufficient improvements in health
when there is an exogenous fiscal deficit equivalent outcomes. For sustainable economic development,
to 1% of GDP, the current account deteriorates it is imperative to enhance public health because
Empirical research from 2000 to 2023
significantly—by 0.27% of GDP in the year of the shock supports the twin deficit hypothesis
better health outcomes correlate with increased
and by 0.28% in the following year (Figure 49). labor productivity and job creation. Life expectancy, a
(positive causal relationship between the fiscal balance and the current account
critical public health metric, has significantly improved
The presence of twin deficits is not necessarily
detrimental in in Africa over the last 20 years, with an average
balance) inthe short term.
Africa If investments
(Annex in public
2.3). The evidence shows that when there is an
increase of 8 years from 2000 to 2022, reaching 63
infrastructure projects drive fiscal deficits in African
countries, the external years (Figure 50). Nevertheless, this figure still falls at
exogenous fiscal balance is expected
deficit to worsen
equivalent to 1% of GDP, the current account
in the short term due to the importation of investment least a decade short of life expectancy levels observed
goods needed forsignificantly—by
deteriorates these projects. However, longGDPin in
in the of
0.27% other
theglobal
yearregions.
of the shock and by
term, the productivity gains from such investments The correlation between health and economic
0.28% in to
should lead the following
higher yearand
growth rates (Figure 49).
an improvement productivity is well-documented. Evidence suggests
in the current account balance. that enhancements in health status catalyze per
Given the persistent nature of external imbalances, capita economic growth through a reduction in
African countries should prioritize productivity- the dependency ratio and increased incentives
The presence
oriented of twin
expenditures. deficits
Government is notshould
spending necessarily detrimental
for investment in the physical
in education, short term.
capital, If
and
focus on infrastructure investment to diversify the innovation (Bloom et al., 2024). This health-economic
investments
economy and reducein reliance
public oninfrastructure
commodity exports. projects
nexusdrive fiscal pronounced
is particularly deficits in African
in African economies,
where data indicates that a 1% increase in life
countries, the and
IV. Human Capital external balance is expected to
Skills Development expectancy correlates with an approximatelyto5.78%
worsen in the short term due
African countries must enhance human capital and increase in real GDP per capita (Figure 51). This
the importation of investment goods needed finding
skills development, which is essential for facilitating
for these projects.
highlights However,
the critical in the and
need for developing
structural transformation and economic diversification. strengthening health systems across African countries
long term, the productivity gains from such toinvestments should
achieve sustainable leadadvancement.
economic to higher
growth rates and an improvement in the current account balance.

given the persistent nature of external imbalances, African countries should

49

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commodity exports.

Figure Figu
49: re 49: D
Dynamic ynamic of
Response Rethe
spo nse ofAccount
Current the Cuto
rreFiscal
nt Ac count(Percent)
Deficit to Fiscal Deficit (in Percent)

public health, as better health outcomes correlate with increased labor

productivity and job creation. Life expectancy, a critical public health metric
has significantly improved in Africa over the last twenty years, with an average
increase of 8 years from 2000 to 2022, reaching 63 years (Figure 50)
Nevertheless, this figure still falls at least a decade short of life expectancy
levels observed in other global regions.

Source: Computations based on data from International Monetary Fund’s World Economic Outlook, October 2024; Kose et al. (2022).
Source: Computations based on data from IMF World Economic Outlook (October
Note: The solid line shows the estimated impulse response; the dashed lines indicate the 90% confidence band.

2024) and Kose et al. (2022). Notes: The solid line gives the estimated impulse
Figure
Figure 50: Life Expectancy, 2000–2022 50: Life Expectancy, 2000-2022
response, while the dashed lines give the 90% confidence band.

IV. HUMAN CAPITAL AND SKILL DEVELOPMENT

African countries must enhance human capital and skill development, which is
essential for facilitating structural transformation and economic diversification.

1. State of Healthcare

Source: Data from World Bank World Development Indicators.

Source:
DespiteData from economic
notable World Bank advancements
World Development Indicators
over the past two decades, numerous
One significant barrier to improving life expectancy worldwide—a figure approximately 4 times less
African countries
in African countries continue
is insufficient to resources
financial experience
thaninsufficient
that in Asia andimprovements in health
South America, 14 times less
for healthcare. Relative to other global regions, than that in Europe, and 28 times less than that in
The
Africa correlation
demonstrates
outcomes. between
For markedly lower health
sustainable health and development,
economic economic productivity
North America (Figure
it is 52). is well-documented
Among
imperativeAfrican
to countries,
enhance
expenditures. For instance, in 2021, the average the lowest per capita health expenditures were
Evidence suggests
health spending that
per capita was enhancements
just US$320 (in in health
reported status
in South Sudan catalyze
(US$32), per capita
the Democratic
current PPP dollars), representing the lowest figure Republic of Congo (US$46), Madagascar (US$57),
economic growth through a reduction in the dependency ratio and increased
50
incentives for investment in education, physical capital, and innovation (Bloom
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 in 2021 at US$ 1549. While this amount remains below the averages for
rope and North America, it surpasses expenditures observed in South
merican and (US$63),
Zimbabwe Asianandcountries. Following
Burundi (US$70). In Seychelles, Mauritius
and Asian countries. (US$ Mauritius
Following Seychelles, 1429),
contrast, Seychelles topped the expenditure list (US$1,429), South Africa (US$1,210), Botswana
in 2021 at US$1,549. While this amount remains (US$1096), and Namibia (US$942) exhibited the
uth Africa (US$ 1210), Botswana (US$
below the averages for Europe and North America, it
1096),highest
following andlevels
Namibia (US$ per942)
of health spending
surpasses expenditures observed in South American capita.
hibited the following highest levels of health spending per capita.
Figure 51: Life Expectancy and Real GDP per Capita
Figure 51: Life Expectancy and Real GDP per Capita

Source: Calculations based on data from World Bank World Development Indicators.
rce: Calculations based on data from World Bank World Development
cators.
Figure 52: HealthFExpenditure
igure 52: Hper
eaCapita
lth Ex(Current
pendituUS$,
re pPPP),
er C2021
apita (current US$, PPP), 2021

Source: Calculations based on data from World Bank World Development Indicators.
Source: Calculations based on data from World Bank World Development Indicators.

2. Education and Allocation of Talents

51

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 relatively low average educational attainment in Africa correlates with a lower
quality of education, as reflected by harmonized scores from major international
2. Education and Allocation of Talents attainment on the continent, with an average of 11
student years, slightly below the Organisation
In 2020, ofamongEconomicthe 46
Over the pastachievement
two decades, African testing
countriesprograms
have (Figure 55-(a)).
Co-operation and Development (OECD) average of
made remarkable progress in educational quantity
12 years. Following South Africa are Eswatini and
asAfrican
measured countries for which
by the school enrollment ratedata
(Figurewere available, only 10 countries scored above
Zimbabwe, in each of which the average number of
53). The net enrollment rate for primary schools in
years of schooling is nine years. The relatively low
400, where 300 represents minimal attainment
sub-Saharan Africa increased by 19.47 percentage andattainment
average educational 625 indicates advanced
in Africa correlates
points during this period, rising from 60.08% in 2000
with a lower quality of education, as reflected by
to stabilize at approximately 79% since 2014. In
attainment. Mauritius achieved the highest
Northern African countries, the average enrollment
harmonized score on major
scores from theinternational
continent at 473,
student
achievement testing programs (Figure 55, panel a). In
rate continuously rose from 80% in 2000 to 92%
infollowed bylevels
Seychelles
comparable with a and
score of 2020,
463.amongThethelow levelscountries
of both educational
46 African for which data
2021, reaching to South
were available, only 10 countries scored above 400 on
Western Asia after diverging in 2002. However, the
quantity
current andrate
enrollment quality in Africa
in sub-Saharan Africa are evident
remains in where
a scale World 300 Bank’s
represents Human CapitalandIndex
minimal attainment
625 indicates advanced attainment. Mauritius achieved
significantly lower than that of other regions by at
the highest score on the continent at 473, followed by
(Figure
least 55-(b)),
12 percentage points.which integrates data on both the quantity and quality of
Seychelles with a score of 463. The low levels of both
Despite the impressive progress in primary school educational quantity and quality in Africa are evident
education and ranks from 0
enrollment rates, educational attainment—measured to 1. Similar
in Worldto the
Bank’s harmonized
Human testing
Capital Index (Figure scores,
55, panel
by the average years of schooling for individuals aged b), which integrates data on both the quantity and
25Mauritius and Seychelles
and older—remains low in many Africanrank as the top
countries two
quality Africanandcountries
of education in from
ranks countries terms of the
0 to 1.
(Figure 54). In Niger, the average number of years of On this index, Mauritius and Seychelles rank as the top
Humanis less
schooling Capital
than oneIndex,
year; inwith scores
countries such asof 0.62
twoand 0.63,
African respectively.
countries, with scores of 0.62 and 0.63,
Burkina Faso, Mali, and Somalia, the average is about respectively.
two years. South Africa boasts the highest educational

Figure 53: Net Enrollment

FigureRate
53for
: NPrimary
et EnroSchool,
llment 2000–2021
Rate for Primary School, 2000-2021

Source: UNESCO Institute of Statistics.

Source: UNESCO Institute of Statistics.

52

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 Figure 54: Mean Years of Schooling,
Figure 54 2018–2022
: Mean Years of Schooling, 2018-2022

Source: Calculations
Source: Calculations based
based on data on data
from UNESCO from
Institute UNESCO Institute of Statistics.
of Statistics.

53

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 Fig55:
Figure urHarmonized
e 55: HaTest
rmoScores
nizedandTest ScCapital
Human oresIndex,
and 2020
Human Capital Index, 2020

Source: Calculations based on data from UNESCO Institute of Statistics.

e: World Bank-The Human Capital Index 2020 Update (World Bank, 2020).
54

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a strong positive correlation between the Human Capital Index in 2020 and the
African countries must enhance their human capital sciences, rather than STEM disciplines.1
Economic
to boost Complexity Index inand
their economic complexity 2022 (Figure 56).
effectively Low STEM enrollment rates lead to poor research
undergo structural transformation. Economic output, impacting innovation and training programs,
complexity is determined by the accumulation of especially for trainers. Between 2020 and 2022, the
productive knowledge that arises from the diversity number of full-time equivalent (FTE) researchers per
African economies
of capabilities within a should
society andimprove science million
their interactions. and inhabitants
technology training
in Africa stood at to
414, attract
slightly fewer
Improving the quantity and quality of human capital than in South America (446). The numbers of FTE
youth. Despite
is essential the economic
to increase critical complexity.
importance This is of science
researchers and technology
per million inhabitants areinmuch
driving
higher
particularly evident in African countries, where there in Asia (2,131), Europe (4,176), and North America
is a strongand
innovation positive correlation between
sustainable the Human
growth, African(5,163).
universities tend
This deficit in to activity
research enroll many
across Africa
Capital Index in 2020 and the Economic Complexity is further underscored by the region’s gross domestic
Index in 2022 (Figure 56). expenditure on research and development, which
students in humanities and social sciences programs, which overshadows
African economies should improve science and averaged only 0.60% of GDP from 2020 to 2022.
Although this percentage surpasses that of South
enrollment
technologyin science,
training engineering,
to attract and technology
youth. Despite the programs. From 2020 to
America (0.24%), it remains substantially lower than
critical importance of science and technology
in driving innovation and 23.08%
sustainable growth, that of developed countries (Table 10). Consequently,
2022, approximately of graduates from tertiary must
African economies education were
foster research from to
endeavors
African universities tend to enroll many students
in humanities and social sciences programs, which enhance training quality and knowledge generation,
Science, Technology, Engineering, and Mathematics
overshadows enrollment in science, engineering, particularly (STEM) programs,
within science which is
and technology.
and technology programs. From 2020 to 2022,
lowerapproximately
than in other
23.08% regions,
of graduatesexcept for South America. This trend be linked to
from tertiary
education were from science, technology, engineering,
rent-seeking behavior
and mathematics in environments
(STEM) programs, which is lower with low institutional quality, causing
than in other regions, except for South America.
students to can
This trend pursue
be linkedprograms that
to rent-seeking offer
behavior in better financial returns, such as law,
environments with low institutional quality, causing 1
business,
studentsand social
to pursue sciences,
programs rather
that offer better than STEM disciplines.
financial returns, such as law, business, and social

Figure
Fig56:
ureHuman
56: HCapital
uman Index
Capitand
al InEconomic
dex andComplexity
EconomicIndex,
Com2020–2022
plexity Index, 2020-2022

Source: Calculations based on data from World Bank’s Human Capital Index 2020 (World Bank 2020) and the Economic Complexity Index from
https://atlas.hks.harvard.edu/rankings.
Source: Calculations based on data from World Bank’s Human Capital Index 2020 (World
Bank, 2020) and the Economic Complexity Index from https://atlas.hks.harvard.edu/rankings.

Low STEM enrollment

Ebeke, Omgba,
1
and Laajaj (2015) rates leadevidence
provide empirical to poor research output, impacting innovation
on this relationship.

and training programs, especially for trainers. Between 2020 and 2022, the
55
1
Ebeke et al. (2015)
Downloaded provides empirical evidence
By muazuahmadmuazu4@gmail.com on this
from 10.11.47.196 relationship.
at 2025-06-30 09:10:38 - UTC. Unauthorized Distribution Prohibited.
Table 10: Graduates from STEM Programs and Research and Development, 2020–2022

Region Percentage of Researchers GERD as a

graduates per million Percentage
from STEM inhabitants (FTE) of GDP
Africa 23.08 414 0.60

Asia 24.25 2131 1.10

Europe 26.59 4176 1.59

North America 25.34 5163 2.34

South America 18.42 446 0.24

Source: Calculations are based on data from the UNESCO Institute of Statistics. Note: Science, technology, engineering, and mathematics (STEM)
programs encompass (1) natural sciences, mathematics, and statistics; (2) information and communication technologies, and (3) engineering,
manufacturing, and construction. Data are averaged over the period 2020–2022. FTE: full-time equivalent ; GERD: gross domestic expenditure on
research and development.

3. Opportunities Offered by the Diaspora potential experienced by the origin countries, assessing
emigration rates by skill level is crucial (Brücker et al.,
A significant issue related to human capital
2013). This measure considers the number of skilled
accumulation in Africa is the emigration of working-
emigrants as a share of the native population in the
age individuals to OECD countries, particularly the
country of origin who have the same skills. Based on
high-skill emigration known as brain drain. Education
this approach, the rate of high-skill emigration rose
and skills play a major role in economic development;
from 20% in 2000 to 24% in 2010, the last year with
brain drain poses a notable challenge to the growth
available data. This means that, in 2010, 24% of highly
of African economies. Although Africa has a high rate
skilled Africans resided in OECD countries. Given the
of intra-continental migration, the intensity of high-
skill-selective migration policies in developed countries,
skill emigration to developed countries in Europe and
the current high-skilled emigration rate from Africa is
North America has been rising over recent decades.
likely even higher.
The overall emigration rate, calculated as the stock
of all emigrants as a percentage of the total native Despite the detrimental direct effects of depriving
population in the country of origin, increased in Africa home countries of talent, emigration yields positive
from 2.72% in 2010 to 2.94% in 2020 (Figure 57). indirect effects on the economies of the origin
In 2020, the emigration rate within the continent countries. The primary channels for these positive
was 1.51%, compared with 1.04% for emigration to effects include migrant remittances, which serve as
Europe and North America. That year, intra-continental a source of financing, skills acquired by returning
emigration accounted for approximately 52% of total migrants, and knowledge transfer from the diaspora.
emigration, while emigration to Europe and North Remittances significantly finance investments
America represented about 35%. and education for migrants’ families in their home
countries. In many African countries, remittances
Analyzing data solely at the aggregate level masks the
constitute a substantial portion of GDP. For example,
intensity and implications of high-skill emigration from
in 2023, remittances represented about 22% of GDP in
Africa. To better understand the loss of labor market
Gambia, 19% in Liberia, and 10% in Senegal.

56

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 FigEmigration
Figure 57: ure 57: from
EmiAfrica
gratio tonOECD
from Africa2000–2010
Countries, to OECD Countries, 2000-2010

Source: Data calculations are derived from the United Nations population statistics databases (UN 2020; UN 2024) and the Institute for
rce: Data calculations
Employment Research (Institut are derived
für Arbeitsmarkt undfrom the United
Berufsforschung) Nations
(Brücker, Capuano, population
and Marfouk statistics
2013). Note: The databases
“total emigration rate” is
the percentage of all emigrants relative to the native population in the country of origin. The “low-skilled emigration rate” refers to emigrants with
, 2020; UN,of 2024)
percentage and
emigrants with the
tertiary Institute
education relative tofor Employment
the native Research
population with tertiary education. (Institut für Arbeitsmarkt
less than tertiary education as a percentage of the native population with the same educational level. The “high-skilled emigration rate” is the

Berufsforschung, IAB) (Brücker et al., 2013). Notes: The “total emigration rate” is the
centage of all emigrants relative to the native population in the country of origin. The
w-skilled emigration rate” refers to emigrants with less than tertiary education as a
centage of the native population with the same educational level. The “high-skilled
gration rate” is the percentage of emigrants with tertiary education relative to the native
ulation with tertiary education. 57

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V. Poverty-reducing Power of Growth and Inequality- achieved a notable reduction in poverty, with a decline
Growth Nexus of about 30 percentage points from 55% in 2003 to
Despite experiencing consistent economic growth over 25% in 2021, thanks to economic and social policies
recent decades, Africa still has the highest poverty implemented since the 1990s.
rates in the world and a relatively slow rate of poverty Compared with sub-Saharan Africa countries, Northern
reduction. The region is among the most inequitable African countries have demonstrated relatively better
globally. African countries face multiple challenges performance in poverty reduction since the early
in improving the effectiveness of growth to reduce 2000s. For example, Egypt’s poverty rate dropped
poverty and inequality. from 3% in 2000 to less than 2% in 2019; Morocco’s
1. Poverty-Reducing Power of Growth rate fell from 8% in 2000 to below 2% in 2013. Over
the past two decades, African countries have exhibited
The global poverty rate, defined as the percentage of a relatively low growth elasticity of poverty (GEP).
the population living on less than US$2.15 a day (based An empirical investigation of 35 African countries
on 2017 purchasing power parity), has significantly from 2000 to 2021 indicates that, on average, a one
decreased from 29% in 2000 to approximately 9% percentage point increase in GDP per capita results
in 2022. This drop represents a reduction of 20 in only about a one percentage point (1.10 at best)
percentage points (see Figure 58, panel a). The decline decrease in the poverty rate in Africa (Table 12 in
is attributed to regions outside of Africa, particularly Appendix 4). This elasticity is at least half what other
Eastern Asia and the Pacific. The poverty rate in regions observe (Bergstrom, 2022).
Eastern Asia and the Pacific fell dramatically over the
past few decades, decreasing from 40% in 2000 to less Several factors contribute to the low GEP in sub-
than 2% by 2016. Saharan Africa. One primary factor driving Africa’s
economic challenges is the high level of income
In contrast, sub-Saharan African economies inequality, which weakens the link between economic
experienced a more moderate reduction in poverty, growth and poverty reduction. In environments
with a decline of 18 percentage points, a drop from with significant income inequality, an increase in
55% in 2000 to 38% in 2021. However, there is GDP tends to have a smaller impact on household
significant variability in poverty reduction across sub- consumption expenditures, limiting the potential for
Saharan Africa countries (Figure 58, panel b and Figure poverty alleviation. The limited access to essential
58, panel c). Western and Central African economies public infrastructure and services further hampers
recorded the largest decline, with their poverty rates Africa’s GEP. Many rural areas in African countries
falling by 28 percentage points, from 55% in 2000 to lack adequate public services such as education and
27% in 2022. The poverty rate in Eastern and Southern healthcare and face high costs to access essential
Africa was the same as in Western and Central Africa infrastructure, including electricity, sanitation, and
in 2000 (55%) and only slightly decreased to 44% in drinking water. As a result, rural populations do
2021. Countries such as Malawi and Zambia continue not fully benefit from increases in national output.
to have some of the highest poverty rates in the Moreover, Africa’s low GEP is partly due to its heavy
world. Their elevated poverty levels are largely due reliance on natural resources. In resource-dependent
to a high percentage of their population living in rural countries with weak institutional frameworks, rent-
areas without basic infrastructure and their reliance seeking behavior undermines the relationship between
on rain-fed agriculture. Conversely, Burkina Faso economic growth and household consumption.

58

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 Figure 58: Poverty Rate, 2000–2019
Figure 58: Poverty Rate, 2000-2019

Source: World Bank Poverty and Inequality Platform: www.pip.worldbank.org.

ource: World Bank Poverty and Inequality Platform: www.pip.worldbank.org.

2. Inequality-growth Nexus

59

frica's high levels of poverty are attributed to the unequal distribution of

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2. Inequality-Growth Nexus
Other African countries, such as Mozambique (which
Africa’s high levels of poverty are attributed to saw an 8-percentage-point increase in consumption
the unequal distribution of wealth. As previously share) and the Democratic Republic of Congo (which
stated, initial inequality significantly influences the experienced a 4-percentage-point increase), have
GEP. Notably, reducing inequality today not only confronted rising inequality over the past two
alleviates poverty in the present, but also fosters decades.
future poverty reduction. Many African countries
The pattern of inequality in Africa over the past two
demonstrate considerable inequalities. For instance,
decades has not aligned with the predictions of the
Namibia was the most unequal country in the 2000s,
Kuznets curve. According to this theory, inequality
with the top 10% of the wealthiest citizens controlling
tends to rise during the early stages of development
approximately 53% of total consumption (Figure
as investment opportunities increase for those with
59). Over the past decade, this figure has decreased
physical capital. Eventually, when a country reaches a
to 47%. During that time, Botswana ranked as the
certain level of development, growth becomes driven
second-most unequal country, with the top 10%
by human capital, which should reduce inequality.
holding 51% of consumption, which has declined
However, the relationship between real GDP per capita
by 10 percentage points to 41% between 2014 and
and the share of consumption held by the wealthiest
2023. The most significant decreases in inequality
10% of African economies shows a weak U-shape
were recorded in Comoros, which experienced a
(Figure 60), contradicting the Kuznets hypothesis. This
14-percentage-point reduction, and the Central African
weak U-shaped relationship indicates that economic
Republic, which saw a 13-percentage-point drop.
performance in Africa has not been matched by
Over the last 20 years, South Africa has maintained
implementation of inclusive policies. It underscores
a consistently high level of inequality, with the
the poorest individuals’ limited access to the public
top 10% of earners capturing 50% to 51% of total
infrastructure and services that are crucial for
consumption. In the 2000s, São Tomé and Principe
enhancing the growth’s poverty-reducing potential.
had the lowest levels of inequality among countries
The relationship between inequality and growth is
with available data, with only 25% of consumption
bidirectional: inequality, in turn, influences economic
held by the top 10%. However, in the last decade,
growth (Barro, 2000). With credit constraints,
inequality has risen in São Tomé and Principe, with
affluent households take advantage of investment
the top 10% now accounting for 33% of consumption.
opportunities. A more equitable distribution of

Figure 59: Share of Consumption Held by the Top 10% Richest, 2000–2023
Figure 59: Share of Consumption Held by the Top 10% Richest, 2000-2023

Source: Calculations are based on data from World Bank Poverty and Inequality Platform (version 20240627_2017_01_02_PROD): www.pip.
Source:
worldbank.orgCalculations
(World Bank 2025). based on data from World Bank Poverty and Inequality Platform

(version 20240627_2017_01_02_PROD): www.pip.worldbank.org (World Bank, 2025).

60

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e percentage point decrease in the consumption share of the wealthiest 10%
tween 2014 and 2018 was associated with a 0.06 percentage point increase
income and assets enhances investment productivity. the consumption share of the wealthiest 10% between
the annual growthgenerally
Reducing inequality rate promotes
of realeconomic
GDP per capita
2014 andfrom 2019
2018 was to 2023
associated (Figure
with a 0.06 61).
percentage
growth. This idea is supported by empirical research point increase in the annual growth rate of real GDP
conducted on African countries from 2014 to 2023, per capita from 2019 to 2023 (Figure 61).
which shows that a one percentage point decrease in
igure 60: Consumption Share Held by the Top 10% Richest versus Real GDP per Capita,
Figure 60: Consumption Share Held by the Top
20010%
0-Richest
2023 Versus Real GDP per Capita, 2000–2023

Source: Computations are based on data from the World Bank World Development Indicators (WDI) and the Poverty and Inequality Platform
urce: (version
Computations based on
20240627_2017_01_02_PROD): data from(Worlddata
www.pip.worldbank.org from World Bank World
Bank 2025).

velopment Indicators (WDI) and Poverty and Inequality Platform (PIP) (version
240627_2017_01_02_PROD): www.pip.worldbank.org (World Bank, 2025).

61

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igure 61: Real GDP per Capita Growth versus Consumption Share Held by the Top 10%
RicheConsumption
Figure 61: Real GDP per Capita Growth Versus st, 2014-2Share
023Held by the Top 10% Richest, 2014–2023

Source: Computations are based on data from the World Bank World Development Indicators (WDI) and the Poverty and Inequality Platform
ce: Computations based on
(version 20240627_2017_01_02_PROD): data from
www.pip.worldbank.org World
(World Bank 2025).Bank World Development

ators (WDI) and Poverty and Inequality Platform (PIP) (version

VI. Green Growth and Climate-related Shocks PCC) are normalized on a scale of 0 to 100, with 100
40627_2017_01_02_PROD): www.pip.worldbank.org representing
(World “perfect
Bank, performance”.
2025). Previously, the
1. Green Growth
overall EPI was calculated as a weighted average of
Africa should promote green growth initiatives HLT and ECO only, with HLT weighted at 40% and ECO
while leveraging its rich natural resources to drive at 60%.
sustainable economic development. According to the
2024 Environmental Performance Index (EPI), the According to the 2024 EPI report, among regions,
VI. G
REENperformance
continent lags in environmental
G
ROWT(Figure
H AND Africa
LIMAhas C
TEtheRlowest -
ELATenvironmental
ED HOCK S
performance S
62). The EPI consists of three components (Wendling score of 39, closely followed by Asia, with a score of
et al., 2024): (1) an ecosystem vitality index (ECO) 40. This poor performance is due to its environmental
that evaluates how effectively countries preserve, health score, which is only 31. In contrast, Europe
protect, and enhance ecosystems and the services they boasts the highest EPI score, achieving top results
1. Green Growth
provide; (2) an environmental health index (HLT) that in all three dimensions (ECO, HLT, and PCC). The five
assesses how well countries protect their populations lowest-scoring African countries are Eritrea (29),
from environmental health risks; and (3) a climate Madagascar (30), Djibouti (32), Burundi (34), and
change index (PCC) that indicates how effectively Rwanda (34). The five highest-scoring are Mauritius
countries implement climate change mitigation policies. (47), Seychelles (48), Botswana (49), Zimbabwe (52),
ca should promote green growth initiatives while leveraging its rich natur
The overall EPI is computed as a weighted average and Gabon (53) (Figure 63). This ranking is attributed
of ECO, HLT, and PCC, with respective weights of to differing ecosystem vitality and environmental
health performances.
ources to drive sustainable economic development. According to the 202
45%, 20%, and 35%. The indices (EPI, ECO, HLT, and

ironmental Performance Index (EPI), the continent lags in environment

ormance (Figure 62). The EPI consists of three components (Wendling et a
4): (i) an Ecosystem Vitality index (ECO) that evaluates how effective
ntries preserve, protect, and enhance ecosystems and the services the
62
vide; (ii) an Environmental Health index (HLT) that assesses how we
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vironmental health performances.

Figure Performance
Figure 62: Environmental 62: EnvirobynRegion,
menta2024
l Performance by Regions, 2024

Source: Calculations are based on data from Yale University: https://epi.yale.edu (Wendling et al. 2024).
urce: Calculations based on data from Yale University (https://epi.yale.edu)
Figur63:
Figure e Environmental
63: Environ mental PineAfrica,
Performance rformBottom
anceFive
in and
AfrTop
icaFive,
, Bo2024
ttom 5 and Top 5, 2024
endling et al., 2024).

Source: Data are from Yale University: https://epi.yale.edu (Wendling et al. 2024).
rce: Data from Yale University (https://epi.yale.edu) (Wendling et al., 2024).

moting green growth through environmental preservation is essentia

63

tering inclusive development across Africa. Enhanced environm

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Figure 64: Poverty FRate
igure 64: PEnvironmental
versus overty Rate versus Environmental Performance
Performance

Source: Computations are based on World Bank World Development Indicators (WDI) and the Poverty and Inequality Platform (version
Source: Computations based
20240627_2017_01_02_PROD): on from World
www.pip.worldbank.org Bank
(World Bank World
2025) Development
and from Indicators (WDI)
Yale University: https://epi.yale.edu (Wendling et al. 2024).
Note: The climate change index is not reflected in the computations because it did not exist in the 2018 EPI report.
and Poverty and Inequality Platform (PIP) (version 20240627_2017_01_02_PROD):
www.pip.worldbank.org (World Bank, 2025) and from Yale University (https://epi.yale.edu)
(Wendling et al., 2024).

2
The climate change index is not reflected in Figure 64 and Figure 65 because it did not exist in the 2018 EPI report.

64

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FiFigure
gure 665:
5: Consumption
Consumption Share
Sharof
e the
of tPoorest
he PoorVersus
est veEnvironmental
rsus EnvironmPerformance,
ental Perfor2018–2022
mance, 2018-2022

Source: Computations
Source: Computationsare basedbased
on World on
Bankfrom
World Development
World Bank Indicators (WDI) and
World the Poverty and Indicators
Development Inequality Platform (version
(WDI)
20240627_2017_01_02_PROD): www.pip.worldbank.org (World Bank 2025) and from Yale University: https://epi.yale.edu (Wendling et al. 2024).
Note: The climate change index is not reflected in the computations because it did not exist in the 2018 EPI report.
and Poverty and Inequality Platform (PIP) (version 20240627_2017_01_02_PROD):
www.pip.worldbank.org (World Bank, 2025) and from Yale University (https://epi.yale.edu)
(Wendling et al., 2024).

65

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 exposure, sensitivity, and ability to adapt to the
Promoting green growth through environmental
negative impacts of climate change. It assesses
preservation is essential for fostering inclusive
vulnerability across six life-supporting sectors: food,
development across Africa. Enhanced environmental
water, health, ecosystem services, human habitat, and
performance, particularly concerning public health, is
infrastructure. The index ranges from 0 to 1, with 1
correlated with declines in poverty and the reduction
representing the highest vulnerability.
of inequality among African countries (Figure 64 and
Figure 65).2 In 2022, Africa registered a vulnerability score of
0.51, significantly higher than the scores of 0.42 for
The ramifications of environmental degradation Asia, 0.41 for the Americas, and 0.33 for Europe.
disproportionately impact vulnerable populations, Chad (0.65) and Niger (0.63) emerged as the most
highlighting the need for targeted policies. Empirical vulnerable countries, reflecting their substantial
data indicate that a one-unit increase in the EPI exposure and limited adaptability to climate shocks
score is linked to a decrease of approximately 1.59 (Figure 67). In contrast, the Northern African countries
percentage points in the poverty rate and a marginal of Algeria (0.36), Morocco (0.37), and Tunisia (0.38)
increase of about 0.02 percentage points in the the least vulnerable, reflecting their geographic
consumption share of the lowest decile.
advantages and relatively better adaptive capacities.
2. Climate-Related Shocks
African countries must enhance their adaptive
Climate-related factors, such as droughts, floods, capacity in response to increasingly frequent extreme
heat waves, and tropical storms, are significant weather events driven by climate change. Research
sources of vulnerability in African economies, which indicates a negative correlation between income per
are highly reliant on rain-fed agriculture and have capita and historical climate vulnerability (Figure 68).
limited capacity to cope with and adapt to climate Among African economies, a reduction in vulnerability
events. This vulnerability is evident from the climate by 0.1 units in 2015 corresponded with a projected
vulnerability index developed by the Notre Dame- increase in annual average real GDP per capita of 0.9%
Global Adaptation Initiative (ND-GAIN) (Figure 66). (2017 PPPUS$) for the period 2020–2024.
The ND-GAIN vulnerability index captures a country’s

Figure 6by
Figure 66: Climate Vulnerability 6: Regions,
Clima2022
te Vulnerability by Regions, 2022

rce: Computations based on data from IMF World Economic Outlook and Notre
Source: Computations are based on data from the International Monetary Fund’s World Economic Outlook and the Notre Dame-Global Adaptation
Index (ND-GAIN).

me-Global Adaptation Index (ND-GAIN).

2
The index of climate change mitigation is not on in Figure 64 and Figure 65 because it did not exist in the 2018 EPI report.

66

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 Figure
Figure 667:
7: CClimate
limate VuVulnerability
lnerability IndexIndex
of Afriof
canAfrican
CountrieCountries,
s, 2022 2022

e: Computations based on IMF

Source: Computations areWorld Economic
based on data fromOutlook data andMonetary
the International Notre Fund’s World Economic Outlook and the Notre Dame-Global Adaptation
Index (ND-GAIN).
-Global Adaptation Index (ND-GAIN).

67

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 Figure 68: Real
Figu GDP
re per
68:Capita
RealVersus
GDP Climate
per Ca Vulnerability
pita versus Climate Vulnerability

Source: Computations are based on data from the International Monetary Fund’s World Economic Outlook for October 2024 and the Notre Dame-
urce: Computations based on data from IMF World Economic Outlook (October
Global Adaptation Index (ND-GAIN).

24) and Notre Dame-Global Adaptation Index (ND-GAIN).

VII. Conclusion performance metrics and possessing the highest
climate vulnerability index. An urgent need is to
African countries are striving for inclusive
enhance adaptive capacities to address climate-related
and sustainable economic growth amid global
VII. byCONCLUchallenges
uncertainties. Their economies, characterized SION
and improve overall conditions.
volatile expansion reliant on commodity exports, are African countries must confront the previously
vulnerable to external shocks. This reality highlights outlined challenges and focus on the following
the need for diversification and structural reforms strategic recommendations to facilitate a shift to more
to enhance resilience. Furthermore, rising public inclusive and sustainable growth trajectories.
can debt
countries areabout
raises concerns striving for inclusive •and
fiscal sustainability, sustainable
Accelerate economic
structural transformation growth
to achieve a
emphasizing the importance of growth-oriented more diversified economy, thereby strengthening
d global uncertainties. Their economies, characterized
public expenditure. Studies suggest that while public by volatile
macroeconomic resilience. expansion
A significant factor
debt minimizes economic growth, it compresses in African countries' economic instability is
the interest rate-growth differential and leads to
ant on commodity
external exports,economic
imbalances. Additionally, are vulnerable
growth is to external
their shocks.
heavy dependence This
on export highlights
of natural
resources. To improve resilience, these countries
accompanied by sluggish social indicators, revealing must accelerate structural transformation and
need fordevelopment
uneven diversification
across populations andand structural reduce reforms tocommodity
reliance on enhance exports.resilience.
This effort
significant deficiencies in human capital, particularly in involves reallocating resources to produce goods
health and education. There is a notable link between
hermore, rising public debt raises concerns
the advancement of human capital and economic
similar to about
those alreadyfiscal sustainability,
made domestically. Energy
and transport infrastructure improvements and
complexity, which is hindered by low enrollment advancements in science and technology education
phasizing
in sciencethe importance
and technology of recent
fields. Despite growth-oriented public expenditure. Studies
are key to this shift. Additionally, promoting the
growth, poverty remains common, indicating that agricultural sector and developing agro-industries
gest economic
that while public
advancements havedebt minimizes
not translated into economic growth,
for local product it compresses
processing are essential for the
improved social outcomes. High inequality and limited economic diversification and stability.
access to public services contribute to a low GEP,
rest challenging
rate-growth differential
the expectations set by the and
Kuznetsleads
curve. to external
• Ensure imbalances.
sovereign debt sustainabilityAdditionally,
by prioritizing
Furthermore, Africa faces environmental degradation growth-oriented investment projects. African
nomic andgrowth is accompanied
climate vulnerabilities, by sluggish social
ranking low in various countriesindicators,
must enhance publicrevealing uneven
spending efficiency
to ensure sovereign debt sustainability. This effort

elopment across populations and significant deficiencies in human capital,

icularly
68 in health and education. There is a notable link between the
ancement
Downloadedof human capital and
By muazuahmadmuazu4@gmail.com fromeconomic complexity,
10.11.47.196 at 2025-06-30 which
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Prohibited.
 involves prioritizing investments in productive on poverty reduction, African countries should
projects, particularly infrastructure, to diversify improve basic public infrastructure and services
their economies and decrease reliance on while reducing reliance on natural resources
commodity exports. Such strategies foster long- through structural transformation. Fostering
term growth, mitigate risks related to interest the manufacturing sector and local commodities
rates, and help address external imbalances in processing creates labor-intensive jobs. Lowering
African economies. inequality is crucial, so addressing disparities
should be part of sustainable development goals.
• Improve healthcare to boost economic Equitable access to education, healthcare, energy,
performance. Despite economic progress in transport, financial services, and targeted safety-
many African countries, health outcomes remain net programs are essential for supporting the most
inadequate. Improving public health is crucial vulnerable populations.
for sustainable economic development because
it enhances labor productivity and job creation. • Achieve sustainable growth and effectively
To strengthen healthcare infrastructure, African manage climate-related impacts. African policy
countries must allocate more resources to health frameworks for environmental protection should
services and invest in transportation and energy. be strengthened without placing excessive
Additionally, fostering public-private partnerships financial burdens on low-income households.
improves access to quality health services and These initiatives must create job opportunities
addresses resource limitations in healthcare. for disadvantaged communities while promoting
environmental sustainability and socioeconomic
• Promote skills development and the effective equity. Green growth should align with policies
allocation of talent. African economies must align addressing climate change adaptation and
skills development with market needs to capitalize mitigation to support sustainable economic
on the demographic window of opportunity. development. African countries must integrate
Enhancing training in science and technology is climate considerations into infrastructure planning
key to attracting youth and increasing economic and enhance disaster preparedness through
complexity for new goods production. improved surveillance systems and an expanded
• Enhance growth to more effectively reduce poverty network of early warning centers.
and combat inequality. To enhance growth's impact

69

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 APPENDICES

Appendix 1: The Interest Rate-Growth Differential � − � and Sovereign Debt

Sustainability

The motion of sovereign debt as a share of GDP is described by:

rt − gt
dt − dt−1 = d − pbt + sfat
it − ngt
1 + gt t−1
= d − pbt + sfat
it − πt − gt
1 + gt t−1
= dt−1 − pbt + sfat
1 + gt

where dt is the debt-to-GDP ratio; rt ( it ) is the implicit real (nominal) interest

rate on debt with rt ≅ it − πt and πt denoting the inflation rate; gt (ngt ) is the
growth rate of real (nominal) GDP, pbt is the primary balance-to-GDP ratio
reflecting fiscal policy and sfat is the stock-flow adjustment that captures
valuation effects (such as the effect of exchange rate variation on foreign-
denominated debt) and “below-the-line” fiscal-financial operations (such as
privatization receipts and accumulation/depletion of government deposits).

The interest rate-growth differential r − g = i − gn is a key factor for debt

sustainability. Indeed, a negative r − g differential creates a favorable snowball
effect supporting debt sustainability, while a positive differential generates an
unfavorable snowball effect that hinders debt sustainability.

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 Appendix 2: Impact of Sovereign Debt on the Interest Rate-Growth Differential

Following Lian et al. (2020), we consider the following regression model over
the period 2000-2022:

(r − g)it = α + β∆dit−1 + μi + τt + εit

where (r − g)it is the interest rate-growth differential, dit−1 is the past debt-to-
GDP ratio, ∆dit−1 = dit−1 − dit−2 is the past change in the debt-to-GDP ratio, μi
stands for country-fixed effect, τt represents period-fixed effect and εit is the
error. To remove cyclical fluctuations, we consider 5-year overlapping averages
(using non-overlapping averages reduces the efficiency of estimations, given
the time dimension of our sample). (r − g)it is the average interest rate-growth
differential of the country i for the years t − 4, t − 3, t − 2, t − 1 and t; ∆dit−1 is
the average change of the debt-to-GDP ratio for the years t − 5, t − 4, t − 3, t −
2 and t − 1.

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Table 11: Impact of Public Debt on the Interest Rate-Growth Differential

Dependent variable: Interest rate-growth differential

(1) (2) (3) (4)

∆ (Public debt/GDP)t-1 0.288*** 0.303*** 0.191*** 0.170***

(0.093) (0.065) (0.071) (0.050)
Constant -6.860*** -5.758*** -10.413*** -9.476***
(0.492) (1.168) (1.451) (1.546)

Observations 767 767 767 767

R-squared 0.139 0.610 0.202 0.674
Country fixed effects No Yes No Yes
Time fixed effects No No Yes Yes
Number of countries 47 47 47 47

Sources: Estimations are based on data from International Monetary Fund’s World Economic Outlook for October 2024 and Afreximbank Research.
Note: Robust standard errors in parenthesis are Newey-Western heteroscedasticity and autocorrelation-consistent standard errors. ***, **, and *
denote significance at the 1%, 5%, and 10% levels, respectively.

Appendix 3: Dynamic Impact of Fiscal Consolidation on External Imbalances

To evaluate the impact of fiscal consolidation on the current account balance,

we use the local projection method (LP) developed by Jordà (2005). Our data
sample includes 42 African countries (selected based on data availability) over
the period 2000-2023. For each horizon h = 0,1,2, …, 5, the model is as follows:

cait+h − cait−1 = αh cafdit + βhk xk,it + μi + τt + εit

K

k=1

where ca is the current account balance as a share of GDP, cafd is the cyclically
adjusted fiscal deficit as a share of the potential GDP; xk are control variables,
including the first lag of the dependent variable, the first lag, and the lead of cab
to correct for bias introduced by overlapping forecast horizons (Teulings and
Zubanov, 2014); μi and τt are respectively country-fixed and year-fixed effects.
The cyclically adjusted deficit as a share of the potential GDP ensures the
homogeneity of fiscal shock; realized fiscal deficit is cyclically sensitive. Data
are collected from the IMF World Economic Outlook (October 2024) and Kose
et al. (2022).

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 Appendix 4: Growth Elasticity of Poverty (GEP)

To estimate the GEP in Africa over the period 2000-2022, we consider the
following regression, as in Wu et al. (2024):

∆ log pit = a + b ∆logyit + ui + ϵit

where ∆ log pit is the annualized log change in poverty rate (pit ) between period t
and t − 1 in country i; ∆logyit denotes the annualized log change in real GDP per
capita expressed in 2017 Purchasing Power Parity (PPP); ui stand for country-
fixed effects. Following the literature on the GEP, we consider only data on
comparable surveys for each country between 2000 and 2022.

Table 12: Growth Elasticity of Poverty

Dependent variable: ChangeTain

blelog
12: (poverty
Growth Elarate)
sticity of Poverty
Dependent variable: Change
(1) in log (poverty(2)
rate) (3) (4)
(1) (2) (3) (4)

Change in log (GDP per -0.834*** -0.803*** -1.097*** -1.097***

capita PPP)
Change in log (GDP per capita -0.834*** -0.803*** -1.097*** -1.097***
PPP) (0.249) (0.250) (0.341) (0.341)
Constant -0.001 -0.001(0.250)
(0.249) -0.058**
(0.341) -0.058**
(0.341)
Constant (0.008) -0.001
(0.007)-0.001 -0.058**
(0.023) -0.058**
(0.023)
(0.008) (0.007) (0.023) (0.023)

Observations 77 75 77 75
Observations 77 75 77 75
R-squared 0.130 0.124 0.765 0.755
R-squared 0.130 0.124 0.765 0.755
Country fixed effects No No Yes Yes
Country fixed effects No No Yes Yes
Only SSAOnly
countries
SSA countries
No No
Yes Yes
No
No Yes
Yes

Notes:
Sources: Estimations Robust
are based standard
on data errors
from the World are
Bank in parenthesis.
Poverty ***, **,
and Inequality Platform and20240627_2017_01_02_PROD):
(version * denote
www.pip.worldbank.org (World Bank 2025). Notes: Robust standard errors are in parenthesis. ***, **, and * denote significance at the 1%,
5%, and 10% levels, respectively. PPP:
significance at purchasing
the 1%, power
5%,parity;
andSSA: sub-Saharan
10% levels,Africa.
respectively. Sources:
Estimations based on data from World Bank Poverty and Inequality
Platform (version 20240627_2017_01_02_PROD): www.pip.worldbank.org
(World Bank, 2025).

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 Table 13: GDP Growth Rate, Percent Change
Table 13: GDP Growth Rate, Percent change
Actuals Estimate Projections
2021 2022 2023 2024 2025 2026 2027

Africa 4.7 4.3 3.3 3.4 4.0 4.1 4.2

Northern Africa 4.8 4.8 3.8 3.2 3.8 4.1 4.1

Algeria 3.8 3.6 4.1 3.4 3.1 2.7 2.3
Egypt 3.3 6.7 3.8 3.0 4.1 4.9 5.0
Libya 28.3 -8.3 10.2 7.6 6.7 4.6 3.4
Morocco 8.2 1.5 3.4 3.0 3.7 3.5 3.3
Tunisia 4.7 2.7 0.0 1.9 2.1 1.9 1.8

Western Africa 4.4 4.0 3.6 4.1 4.4 4.2 4.2

Benin 7.2 6.3 6.4 6.1 6.0 6.0 6.0
Burkina Faso 6.9 1.8 3.1 4.4 4.4 4.3 4.3
Cabo Verde 7.0 17.4 5.1 4.7 5.0 4.6 4.4
Côte d'Ivoire 7.1 6.2 6.2 6.6 6.8 6.5 6.4
Ghana 5.1 3.8 2.9 3.4 4.4 4.8 5.3
Guinea 5.6 4.0 5.7 5.0 6.3 6.2 5.7
Guinea-Bissau 6.2 4.6 5.2 4.8 4.8 4.6 4.5
Liberia 5.0 4.8 4.6 5.2 6.1 5.8 5.5
Mali 3.1 3.5 4.4 3.9 4.2 4.4 4.6
Mauritania 0.7 6.8 6.5 5.2 5.5 5.0 4.7
Niger 1.4 11.9 2.4 9.5 6.6 5.9 6.1
Nigeria 3.6 3.3 2.9 3.1 3.4 3.3 3.1
Senegal 6.5 4.0 4.6 8.1 8.5 6.1 6.0
Sierra Leone 5.9 5.3 5.7 4.0 4.4 4.5 4.7
The Gambia 5.3 4.9 5.3 5.8 5.7 5.3 5.2
Togo 6.0 5.8 5.6 5.5 5.5 5.4 5.3

Central Africa 3.1 5.1 4.4 3.9 4.2 3.9 4.1

Cameroon 3.0 3.7 3.2 4.1 4.6 4.5 4.5
Central African Republic 1.0 0.5 0.7 2.0 2.8 2.6 2.8
Chad -0.9 3.6 4.9 3.1 3.3 2.4 2.0
Democratic Republic of the Congo 5.9 8.8 8.4 5.5 6.0 5.5 5.7
Equatorial Guinea 0.9 3.7 -6.2 2.8 2.6 2.7 2.7
Gabon 1.5 3.0 2.4 4.0 4.1 3.9 3.6
Republic of Congo 1.1 1.8 2.0 -1.7 -3.0 -2.6 -0.4
São Tomé and Príncipe 1.9 0.2 0.4 2.4 3.2 3.5 3.3

Eastern Africa 5.5 4.5 3.3 4.4 5.7 6.0 6.2

Burundi 3.1 1.8 2.7 4.6 5.2 5.5 5.8
Comoros 2.0 2.6 3.0 3.5 3.9 4.1 4.1
Djibouti 4.5 3.9 7.0 5.7 5.7 5.2 4.9
Ethiopia 6.3 6.4 7.2 6.7 6.8 7.3 7.5
Kenya 7.6 4.9 5.6 5.0 5.3 5.4 5.5
Rwanda 10.9 8.2 8.2 7.1 7.2 7.2 6.9
Sudan 0.5 -2.5 -18.3 -11.2 0.5 2.8 3.5
Tanzania 4.8 4.7 5.1 5.6 6.0 6.0 6.1
Uganda 5.5 6.3 4.6 5.9 6.8 6.5 6.4

Southern Africa 4.7 3.2 1.8 2.2 2.6 2.8 3.0

Angola 2.1 4.2 1.0 3.0 3.1 3.2 3.4
Botswana 11.9 5.5 2.7 2.9 4.3 4.0 3.9
Eswatini 10.7 0.5 4.9 3.7 3.5 2.9 3.0
Lesotho 1.7 1.6 2.2 1.9 2.2 2.3 2.3
Madagascar 5.7 4.0 3.8 4.5 4.6 4.3 3.9
Malawi 4.6 0.9 1.5 2.5 3.4 3.8 3.8
Mauritius 3.4 8.9 7.0 4.9 4.6 3.6 3.3
Mozambique 2.4 4.4 5.4 4.9 5.4 4.8 7.9
Namibia 3.6 5.4 4.2 3.1 3.6 3.5 3.3
Seychelles 0.6 15.0 3.2 3.6 4.0 3.7 3.7
South Africa 5.0 1.9 0.7 1.1 1.6 1.9 2.0
Zambia 6.2 5.3 5.4 3.6 5.0 5.2 5.0
Zimbabwe 8.5 6.1 5.3 3.0 3.8 3.3 3.6
Source:
Source:Afreximbank Research 2024.
Afreximbank Research 2024.

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 TabTable
le 14:14:
InflInflation
ation raRate,
te, PePercent
rcent cChange
hange
Actuals Estimate Projections
2021 2022 2023 2024 2025 2026 2027

Africa 12.3 14.2 18.2 19.3 14.8 10.5 9.1

Northern Africa 4.8 8.4 17.8 18.5 13.6 8.4 7.2

Algeria 7.2 9.3 9.3 6.0 5.7 5.9 6.2
Egypt 4.5 8.5 24.4 27.7 19.6 10.8 8.6
Libya 2.9 4.5 2.4 2.6 3.4 3.5 3.4
Morocco 1.4 6.6 6.1 1.6 2.3 2.1 2.1
Tunisia 5.7 8.3 9.3 7.4 7.2 6.9 7.3

Western Africa 12.6 17.1 20.6 21.4 15.7 11.1 9.3

Benin 1.7 1.4 2.8 2.4 1.6 1.9 1.8
Burkina Faso 3.9 14.1 0.7 2.3 2.0 2.0 2.0
Cabo Verde 1.9 7.9 3.7 1.9 1.9 1.8 1.8
Côte d'Ivoire 4.2 5.2 4.4 3.6 2.9 2.4 2.1
Ghana 10.0 31.9 39.2 23.1 14.5 9.5 8.5
Guinea 12.6 10.5 7.8 8.8 8.8 7.6 7.3
Guinea-Bissau 3.3 7.9 7.2 4.3 3.7 2.3 2.3
Liberia 7.8 7.6 10.1 8.7 7.4 5.1 4.9
Mali 3.8 9.7 2.1 2.5 2.1 2.0 2.0
Mauritania 3.6 9.6 4.9 3.5 4.0 4.0 4.0
Niger 3.8 4.2 3.7 4.2 3.1 2.6 2.0
Nigeria 17.0 18.8 24.7 29.8 22.3 15.8 13.1
Senegal 2.2 9.7 5.9 2.4 2.3 1.8 2.0
Sierra Leone 11.9 27.2 47.7 39.2 27.7 15.2 11.4
The Gambia 7.4 11.5 17.0 11.1 6.7 6.0 6.0
Togo 4.5 7.6 5.3 3.1 2.7 2.0 1.9

Central Africa 3.9 6.7 10.5 8.4 4.6 4.3 4.1

Cameroon 2.3 6.3 7.4 4.6 3.4 3.4 2.8
Central African Republic 4.3 5.6 3.0 4.1 3.3 3.6 3.3
Chad -0.8 5.8 4.1 4.2 3.1 3.0 3.0
Democratic Republic of the Congo 9.0 9.3 19.9 16.4 7.6 6.5 6.5
Equatorial Guinea -0.1 4.9 2.5 2.5 2.3 2.1 2.0
Gabon 1.1 4.3 3.6 3.9 2.6 2.6 2.6
Republic of Congo 2.0 3.0 4.3 3.1 2.3 2.7 2.6
São Tomé and Príncipe 8.1 18.0 21.2 13.0 7.7 6.0 6.0

Eastern Africa 62.8 32.7 21.2 20.9 14.9 10.5 8.6

Burundi 8.3 18.9 27.0 18.1 15.2 12.1 8.5
Comoros 0.0 12.4 8.5 2.1 1.8 1.8 1.8
Djibouti 1.2 5.2 1.4 2.6 2.2 2.7 2.9
Ethiopia 26.8 33.9 30.2 22.5 16.4 14.6 13.5
Kenya 6.1 7.6 7.7 5.6 5.3 5.8 5.6
Rwanda 0.8 13.9 14.0 3.8 5.2 4.9 4.9
Sudan 359.1 138.8 77.2 132.6 80.2 33.8 16.7
Tanzania 3.7 4.4 3.8 3.5 3.9 3.8 4.1
Uganda 2.2 7.2 5.4 4.0 4.9 4.6 4.8

Southern Africa 13.9 19.0 38.9 20.1 18.8 15.7 14.7

Angola 25.8 21.4 13.6 26.7 24.2 14.1 11.1
Botswana 6.7 12.2 5.1 4.4 4.4 4.2 4.1
Eswatini 3.7 4.8 4.9 4.9 4.8 3.8 3.9
Lesotho 6.0 8.3 6.3 6.6 6.0 5.2 5.1
Madagascar 5.8 8.2 9.9 7.1 6.8 6.2 5.9
Malawi 9.3 20.8 28.8 29.4 18.5 13.6 10.7
Mauritius 4.0 10.8 7.0 4.3 3.9 3.8 3.6
Mozambique 6.6 10.4 7.0 3.7 4.4 4.6 4.9
Namibia 3.6 6.1 5.9 4.8 4.5 4.5 4.6
Seychelles 9.8 2.6 -1.0 0.2 1.8 3.1 3.5
South Africa 4.6 6.9 5.9 5.6 5.3 4.5 4.5
Zambia 22.0 11.0 10.9 13.7 9.6 7.4 7.0
Zimbabwe 98.5 193.4 667.4 210.0 199.6 187.6 177.8

Source: Afreximbank Research 2024.

Source: Afreximbank Research 2024.

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 TableTable
15: P15: Primary Balance, Percent of GDP
rimary Balance, Percent of GDP
Actuals Estimate Projections
2021 2022 2023 2024 2025 2026 2027

Africa -5.1 -4.5 -4.5 -5.8 -5.4 -4.7 -4.0

Northern Africa -6.1 -4.4 -5.1 -9.0 -8.6 -7.2 -5.6

Algeria -6.3 -3.0 -5.2 -9.3 -8.6 -7.6 -7.2
Egypt -7.0 -5.8 -5.8 -10.1 -10.1 -8.2 -5.6
Libya 14.8 23.6 8.2 -4.8 -2.1 -1.2 -0.3
Morocco -6.0 -5.4 -4.4 -4.3 -3.8 -3.3 -3.2
Tunisia -7.6 -6.9 -6.9 -5.9 -5.1 -5.4 -5.8

Western Africa -6.0 -6.3 -4.3 -4.5 -3.8 -3.5 -3.6

Benin -5.7 -5.6 -4.1 -3.7 -2.9 -2.9 -2.9
Burkina Faso -7.5 -10.7 -6.9 -5.7 -4.7 -3.8 -3.0
Cabo Verde -7.5 -4.1 -0.3 -2.9 -2.1 -1.2 -0.6
Côte d'Ivoire -4.9 -6.8 -5.2 -4.0 -3.0 -3.0 -3.0
Ghana -12.0 -11.8 -3.6 -4.7 -3.7 -3.1 -2.8
Guinea -1.7 -0.9 -1.8 -3.0 -2.6 -2.6 -2.5
Guinea-Bissau -5.9 -6.1 -8.2 -3.8 -3.0 -3.0 -3.0
Liberia -2.5 -5.3 -7.1 -2.4 -3.5 -2.4 -1.9
Mali -4.8 -5.0 -3.9 -3.6 -3.3 -3.0 -3.0
Mauritania 2.6 -3.1 -2.5 -1.2 -1.2 -1.3 -1.5
Niger -6.1 -6.8 -5.4 -4.1 -3.0 -3.0 -3.0
Nigeria -5.5 -5.4 -4.2 -4.6 -4.2 -4.0 -4.3
Senegal -6.3 -6.6 -4.9 -7.5 -4.5 -3.0 -3.0
Sierra Leone -4.3 -5.9 -5.0 -2.9 -3.6 -1.7 -0.9
The Gambia -4.8 -4.9 -3.7 -2.7 -0.3 -0.3 -0.5
Togo -4.7 -8.3 -6.7 -4.9 -3.0 -3.0 -3.0

Central Africa -1.6 1.2 -0.6 -0.9 -1.3 -1.6 -1.6

Cameroon -3.0 -1.1 -0.6 -0.5 -0.8 -1.1 -1.1
Central African Republic -6.0 -5.3 -3.6 -3.1 -1.8 0.1 0.3
Chad -1.5 4.2 -1.3 -0.7 -2.6 -3.1 -2.8
Democratic Republic of the Congo -1.6 -0.5 -1.7 -2.0 -1.2 -1.1 -1.0
Equatorial Guinea 2.7 11.8 2.5 3.0 0.3 -0.9 -2.7
Gabon -1.9 -0.9 -1.9 -3.9 -6.5 -7.2 -7.9
Republic of Congo 1.6 8.9 5.8 3.8 3.0 2.8 3.6
São Tomé and Príncipe -1.5 -2.2 1.1 4.0 4.2 1.6 1.5

Eastern Africa -4.3 -4.6 -4.1 -3.5 -3.1 -2.8 -2.6

Burundi -5.3 -10.6 -8.4 -7.4 -3.6 -3.6 -3.3
Comoros -2.8 -4.0 -1.3 -2.8 -2.5 -2.4 -1.5
Djibouti -3.1 -1.4 -3.4 -4.5 -4.1 -3.6 -2.9
Ethiopia -2.8 -4.2 -2.6 -1.7 -1.7 -2.1 -2.0
Kenya -7.2 -6.1 -5.8 -5.0 -4.3 -4.0 -3.6
Rwanda -7.0 -5.7 -5.1 -7.3 -3.7 -2.9 -2.9
Sudan -0.3 -2.1 -3.6 -2.8 -3.8 -3.8 -3.7
Tanzania -3.5 -3.9 -3.5 -2.9 -2.9 -2.8 -2.7
Uganda -7.4 -5.9 -4.9 -4.9 -3.8 -1.5 -1.0

Southern Africa -3.6 -3.6 -4.8 -4.5 -4.1 -3.6 -3.3

Angola 3.4 0.6 -1.9 1.6 1.3 0.9 0.9
Botswana -2.4 0.0 -4.7 -5.9 -1.7 -0.4 0.5
Eswatini -4.5 -6.2 -1.5 -1.7 -3.7 -3.5 -2.6
Lesotho -5.4 -5.5 9.2 5.2 5.9 3.0 0.8
Madagascar -2.8 -5.5 -4.1 -3.8 -3.8 -4.0 -3.8
Malawi -8.3 -9.3 -9.2 -8.0 -5.6 -3.0 -2.0
Mauritius -4.1 -3.1 -4.1 -2.9 -2.9 -2.7 -2.4
Mozambique -3.9 -5.1 -4.1 -4.2 -2.0 -0.9 -0.4
Namibia -8.8 -6.1 -3.1 -2.6 -4.1 -4.5 -4.6
Seychelles -5.8 -0.7 -1.2 -1.4 -1.4 -0.8 0.2
South Africa -5.5 -4.3 -5.8 -6.2 -6.3 -5.4 -5.1
Zambia -8.1 -7.8 -6.5 -6.1 -2.8 -3.4 -2.6
Zimbabwe -2.2 -6.0 -6.2 -10.4 -7.9 -7.8 -7.6

Source:
Source: Afreximbank
Afreximbank Research
Research 2024. 2024.

76

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 Table Table
16: G16:
eneGeneral
ral GovGovernment
ernment GroGross
ss DeDebt,
bt, PPercent
ercent ooff GDP
GDP
Actuals Estimate Projections
2021 2022 2023 2024 2025 2026 2027

Africa 65.9 65.7 69.6 67.2 65.0 61.9 60.6

Northern Africa 76.7 75.2 79.4 77.7 76.1 69.2 66.8

Algeria 55.1 48.1 48.6 39.9 36.8 40.2 42.4
Egypt 89.9 88.5 95.9 97.8 96.3 83.1 78.2
Libya .. .. .. .. .. .. ..
Morocco 69.4 71.5 69.5 66.4 66.4 65.9 65.0
Tunisia 79.7 82.9 82.4 73.1 75.4 77.0 77.6

Western Africa 46.0 50.8 54.1 51.1 51.4 51.6 50.9

Benin 50.3 54.2 54.5 49.1 49.1 48.0 47.1
Burkina Faso 55.6 58.4 55.9 56.3 58.8 60.0 60.0
Cabo Verde 149.1 124.0 114.0 109.2 106.8 104.2 98.9
Côte d'Ivoire 50.2 56.6 58.1 51.8 53.1 52.7 52.3
Ghana 79.2 92.7 82.9 83.3 80.9 77.9 74.9
Guinea 42.7 40.2 40.8 36.5 31.6 29.3 27.8
Guinea-Bissau 79.0 80.8 79.4 73.1 72.4 70.2 68.1
Liberia 53.3 54.0 58.8 49.4 49.8 51.0 51.7
Mali 50.3 53.1 55.9 48.1 50.2 51.1 50.8
Mauritania 54.5 50.5 48.2 46.5 45.4 46.0 46.7
Niger 51.3 50.6 56.6 44.8 44.0 42.7 41.6
Nigeria 35.7 39.7 46.4 43.6 44.9 46.1 45.8
Senegal 73.3 76.0 81.2 73.1 66.5 63.4 63.4
Sierra Leone 47.1 54.0 49.2 77.5 67.1 65.4 63.3
The Gambia 83.1 82.9 75.2 68.2 62.1 58.2 53.6
Togo 64.9 67.4 68.0 61.2 63.6 62.4 61.0

Central Africa 42.6 38.8 39.1 38.7 35.3 33.0 31.4

Cameroon 47.2 45.6 43.2 39.8 37.2 34.5 32.7
Central African Republic 48.5 51.0 57.6 52.5 53.3 54.1 50.2
Chad 42.4 34.5 32.7 34.1 32.1 30.8 29.7
Democratic Republic of the Congo 15.9 14.3 14.4 12.3 9.6 7.9 6.5
Equatorial Guinea 42.3 30.2 37.4 67.5 69.4 75.0 79.9
Gabon 68.4 65.6 72.1 104.4 97.1 91.7 86.8
Republic of Congo 97.8 92.5 99.0 48.3 41.6 37.5 37.9
São Tomé and Príncipe 60.1 55.9 50.7 50.4 43.9 38.9 32.4

Eastern Africa 75.5 71.8 74.8 74.7 66.6 64.1 64.1

Burundi 66.6 68.4 62.4 57.3 68.4 58.3 53.9
Comoros 26.3 28.1 33.2 29.8 32.2 33.1 33.4
Djibouti 40.4 36.6 34.6 56.4 52.6 48.4 43.6
Ethiopia 53.8 46.9 38.7 33.7 26.5 24.9 24.6
Kenya 68.2 67.8 73.1 69.9 70.1 68.1 65.4
Rwanda 66.6 60.6 64.5 53.7 62.9 65.0 65.1
Sudan 189.6 186.8 252.2 354.3 277.5 254.8 270.1
Tanzania 43.4 44.9 46.9 43.5 43.2 41.4 39.9
Uganda 50.4 50.0 51.0 46.1 45.4 44.7 43.0

Southern Africa 70.4 69.5 75.6 71.0 68.9 68.0 66.8

Angola 74.3 56.1 73.7 89.5 75.1 66.6 58.8
Botswana 18.7 18.1 20.1 15.4 17.1 17.1 16.3
Eswatini 37.0 40.7 38.5 37.1 34.9 36.1 37.1
Lesotho 58.4 64.5 61.5 67.4 63.3 60.7 60.2
Madagascar 51.9 53.9 55.6 51.1 50.2 50.3 51.0
Malawi 66.5 76.7 91.3 78.9 72.0 72.8 71.9
Mauritius 85.9 81.2 78.6 76.0 76.3 77.2 77.6
Mozambique 104.3 100.3 93.9 88.5 93.4 92.1 86.9
Namibia 69.6 70.0 66.1 67.7 64.5 63.1 62.4
Seychelles 71.2 58.9 56.5 55.6 57.9 57.1 54.6
South Africa 68.7 70.8 73.4 73.0 74.1 77.0 79.1
Zambia 111.0 99.5 127.3 .. .. .. ..
Zimbabwe 58.2 102.1 96.7 79.8 88.0 77.6 71.5

Source:
Source: Afreximbank
Afreximbank Research
Research 2024. 2024.

77

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 Table Table
17: C17:
urreCurrent
nt AccoAccount
unt BalBalance,
ance, PePercent
rcent oof
fGGDP
DP
Actuals Estimate Projections
2021 2022 2023 2024 2025 2026 2027

Africa -2.0 -1.9 -1.5 -2.4 -2.0 -2.2 -2.4

Northern Africa -3.2 -0.3 0.1 -3.4 -2.0 -2.1 -2.5

Algeria -2.4 8.4 2.5 0.4 -1.1 -2.2 -2.7
Egypt -4.4 -3.5 -1.2 -6.2 -3.4 -3.0 -3.3
Libya 16.1 28.6 14.6 17.8 18.5 16.5 14.1
Morocco -2.3 -3.6 -0.6 -1.9 -2.1 -2.1 -2.2
Tunisia -6.0 -9.0 -2.7 -2.5 -2.7 -3.1 -2.8

Western Africa -2.5 -3.1 -2.1 -0.4 -0.5 -0.9 -1.4

Benin -4.2 -6.1 -5.9 -4.9 -4.3 -4.3 -4.1
Burkina Faso 0.4 -7.4 -8.0 -6.1 -5.0 -4.8 -4.6
Cabo Verde -11.9 -3.6 -3.1 -5.8 -6.1 -7.0 -6.9
Côte d'Ivoire -3.9 -7.7 -8.0 -2.6 -2.6 -2.6 -2.5
Ghana -2.7 -2.3 -1.4 0.5 -0.4 -1.4 -1.6
Guinea -2.5 -8.6 -8.8 2.7 3.7 4.7 5.4
Guinea-Bissau -0.8 -8.6 -8.7 -4.8 -4.0 -3.3 -3.0
Liberia -17.8 -19.0 -26.4 -23.6 -21.0 -19.0 -16.8
Mali -7.4 -10.8 -7.1 -4.1 -3.7 -3.6 -3.0
Mauritania -8.6 -14.9 -8.8 -11.0 -9.4 -9.1 -9.0
Niger -14.1 -16.2 -14.4 -4.7 -3.0 -3.8 -5.6
Nigeria -0.7 0.2 1.7 1.7 1.2 0.7 -0.2
Senegal -12.1 -20.0 -18.8 -10.6 -6.7 -6.0 -5.5
Sierra Leone -5.7 -2.2 -6.0 -3.7 -4.6 -4.4 -3.5
The Gambia -4.2 -4.2 -8.6 .. .. .. ..
Togo -2.2 -3.5 -2.9 -4.1 -3.5 -3.1 -2.9

Central Africa -0.2 0.3 -2.6 -1.9 -1.9 -2.5 -2.8

Cameroon -4.0 -3.4 -3.9 -2.6 -2.5 -2.5 -2.4
Central African Republic -11.2 -12.9 -8.8 -7.1 -6.1 -4.5 -4.1
Chad -1.8 5.5 -0.9 -1.6 -2.2 -2.6 -2.7
Democratic Republic of the Congo -1.0 -4.9 -6.3 -4.1 -3.6 -3.3 -3.2
Equatorial Guinea 4.2 2.1 -0.8 2.3 2.4 1.8 -0.7
Gabon 3.5 10.9 5.4 6.7 6.6 1.0 -0.9
Republic of Congo 12.8 17.7 6.4 -3.1 -5.6 -6.7 -7.2
São Tomé and Príncipe -13.1 -14.4 -12.3 -0.1 -0.1 -0.1 -0.1

Eastern Africa -5.4 -6.3 -4.4 -4.5 -4.3 -4.3 -4.2

Burundi -11.9 -15.9 -13.8 -17.3 -14.9 -13.3 -11.8
Comoros -0.3 -0.6 -2.5 -4.4 -3.5 -4.6 -4.3
Djibouti -6.6 17.6 22.4 5.4 4.6 -1.5 0.7
Ethiopia -3.2 -4.3 -2.9 -2.8 -2.5 -2.8 -3.2
Kenya -5.2 -5.0 -4.0 -4.3 -4.3 -4.2 -4.0
Rwanda -10.9 -9.4 -11.7 -12.2 -10.6 -9.4 -8.8
Sudan -7.5 -11.3 -3.6 -4.7 -5.3 -6.2 -6.8
Tanzania -3.9 -5.7 -5.3 -3.9 -3.9 -3.8 -3.7
Uganda -8.4 -8.6 -7.4 -7.3 -6.6 -5.5 -4.1

Southern Africa 2.9 -0.6 -1.4 -1.8 -2.2 -2.4 -2.2

Angola 10.0 8.3 3.8 4.4 2.3 1.9 1.7
Botswana -1.3 -1.2 -0.6 -4.2 -0.5 -0.1 0.3
Eswatini 2.6 -2.7 2.2 1.5 1.0 -1.0 -1.3
Lesotho -9.0 -13.8 -0.2 -3.8 -6.1 -4.6 -4.4
Madagascar -4.9 -5.4 -4.5 -5.1 -4.7 -5.3 -5.5
Malawi -15.4 -16.7 -16.3 -13.3 -13.3 -12.1 -11.9
Mauritius -13.0 -11.1 -3.3 -3.8 -3.6 -3.5 -3.8
Mozambique -21.3 -36.4 -10.6 -23.2 -29.7 -32.7 -28.0
Namibia -11.4 -13.0 -14.8 -10.5 -9.9 -11.4 -11.9
Seychelles -8.7 -7.4 -7.2 -7.8 -7.8 -7.5 -7.5
South Africa 3.7 -0.5 -1.6 -2.0 -2.1 -2.2 -2.1
Zambia 11.9 3.8 -1.9 0.8 2.6 3.6 4.7
Zimbabwe 1.0 0.9 0.4 0.1 0.6 0.8 1.0
Source: Afreximbank Research 2024.
Source: Afreximbank Research 2024.

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