The latest edition of the World Bank’s Africa’s Pulse report on the continent’s economy and the factors shaping its future makes for sombre reading, with its depiction of a continent stuck in low gear.
Reading the report reminded me, by painful contrast, of the ‘Africa Rising’ narrative earlier this century. Africa Rising was a term coined in 2011 to describe sub-Saharan Africa’s rapid economic growth since 2000 and the ‘inevitability’ of its subsequent continuation, with rising incomes and a growing middle class.
Sobering statistics
It is a very different story now. The World Bank report downgrades sub-Saharan growth forecasts for 2024 from 3.4% to 3% as a result of the conflict in Sudan (excluding Sudan, growth is projected to be 3.5%). Real income per capita across Africa this year is expected to be 2% lower than it was five years ago, while the ranks of the poor have swollen from 448 million to 464 million in the two years to 2024. These are not figures that sit well with the great optimism of Africa Rising.
Further bad news comes from the debt burden overhanging countries across the continent, as debt is projected at about 58% of GDP. The burden has been exacerbated by a gradual shift from concessional (below market rate) financing to market financing as international capital markets have once again opened to African countries, leading to higher interest payments. This year, Africa will pay interest of US$19bn, 80% of which is to non-concessionary lenders.
Debt service and repayment obligations mean that many African governments are having to make the painful decision to postpone or even shelve important investments in education, infrastructure and other development priorities. And investment postponement or cancellation notwithstanding, a good number of countries on the continent are still at risk of debt distress – 53% of International Development Association-eligible countries are either already in, or at high risk of, debt distress.
Fear of debt distress has led to deep cuts in developmental spending
The report does have some good news, however, with fiscal deficits projected to drop from 3.9% of GDP in 2023 to 3.3% in 2024 and 2.9% in 2025. But the smile that spread across my face when I read this quickly disappeared when I reflected that those numbers have been driven by deep cuts in developmental spending brought about by fears of debt distress and the lending conditions of concessionary creditors.
Conflict in Sudan and elsewhere, extreme weather events such as droughts and floods all across Africa, and eruptions of simmering unrest in Kenya, Uganda and Nigeria add to the gloomy tale. The projections show that Africa’s living standards in 2025 will remain below what they were in 2014.
No one wants to be told their lot has not really improved in 10 years. So, in search of some uplifting insights, I scanned the report to find the inflation story, which I knew would be positive. The report projects a broad-based drop in inflation from 7.1% in 2023 to 4.8% in 2024 and 4.6% in 2025. Of course, high-inflation countries such as Angola, Egypt, Malawi and Nigeria continue to struggle, but I was happy to take whatever good news I could find.
The problems are clear, but what are the solutions? How can we drag ourselves out of the swamp the continent’s economy has been in over the past decade, get back to rapid growth and revive the Africa Rising story?
Africa must show itself to be a place of opportunity, not one of crisis and poor governance
Investment and education
What would help enormously is to direct fiscal policies at efforts to improve living standards across the continent and lift people out of poverty.
Africa can do much to improve the efficiency of its spending. Lavish spending on governance must stop and more be spent instead on creating an enabling environment for investment, which will attract the huge volume of capital Africa needs for its development. It is important for the continent to show itself as a place of opportunity and not one of crisis, conflict and poor governance.
Greater investments are required in energy, transport networks and telecoms infrastructure, which can accelerate inclusive growth and attract investment. According to the World Bank’s report, Africa can get back to rapid growth ‘by removing productivity constraints, reducing the cost of delivered goods, facilitating the movements of people and products, and increasing competitiveness’.
Africa must also invest in its people. With its youthful demography, the continent has an opportunity to boost future productivity through education. That education should be focused on production, with school curriculums deliberately setting out to equip people with the skills to produce what domestic and international markets want. Only then can African lives truly be improved. Only then will reports like this October’s Africa’s Pulse make for uplifting reading.
