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According to the African Development Bank’s (AfDB) African Economic Outlook 2023 report, Africa is set to be the second-fastest growing region in the world after Asia in 2023-2024

AfDB African Development Bank Africa EconomyThe report forecasts that the continent will consolidate its post-Covid-19 pandemic recovery to 4.3% GDP growth in 2024. (Image source: Adobe Stock)

This projected growth demonstrates the resiliency of the continent’s economy despite the global shocks of recent years. However, it will depend on global conditions and Africa’s ability to bolster its economic resilience further. 

The report forecasts that the continent will consolidate its post-Covid-19 pandemic recovery to 4.3% GDP growth in 2024, from 3.8% in 2022. Around 22 countries are expected to record growth rates above 5%. 

To ensure this growth is realised, AfDB recommends robust policy actions, including incentivising green industries and providing guarantees at scale to de-risk private sector investments.

At the launch of the report, several potential policy actions for stimulating more private sector financing for climate and green growth were outlined. These include tapping into the expanding global and domestic private equity and venture capital appetite for African markets and engaging with the emerging carbon markets and debt-for-climate swaps.

African Development Bank Group president, Akinwumi Adesina, said that African countries must do more, including mobilising domestic resources and restructuring debt to withstand global headwinds. 

“African economies are moving in the right direction,” Adesina commented. “But as we gather today, the world is facing multiple challenges, including climate change, inflation driven by higher prices of energy, commodities, and disruption of supply chains due to the ongoing Russia-Ukraine war.”

He continued that the monetary tightening in the United State and Europe has led to rising interest rates that have compounded debt service payments for African countries. 

According to new research by AfDB, private sectoring financing will need to grow annually by 36% until 2030 to close the continent's climate finance gap, evaluated on average at US$213.4bn per year. This will be important to address the continent’s climate financing needs, estimated at as much as US$2.8 trillion over 2020-2030. AfDB noted that unlocking private climate financing will require addressing both demand- and supply-side barriers while developing innovative financing instruments to tap into the continent’s enormous investment opportunities in climate and green growth.

The report also highlights the important role of Africa’s huge natural capital in bridging the prevailing climate finance gap and promoting green growth transitions. Through sustainable management, Africa's abundant natural capital can be transformed into financial assets to complement financing for climate adaptation and mitigation, as well as into investments that support green growth transitions. This will require the deployment of appropriate policies and instruments, including fiscal instruments, to better understand the true value of Africa’s natural capital and strengthen local content and value addition. It will also build institutional capacity to address gaps in governance that have prevented the continent from realising the full potential of its natural endowments and create regional value chains and markets to benefit from cross-regional synergies. 

Read the full report here.