The Economic Commission for Africa (ECA) says Africa’s economy could experience positive growth if the prevailing multiple shocks were adequately addressed.
Many African countries are struggling to meet the continent’s development goals due to the impact of severe and mutually reinforcing complex economic shocks, according to a statement.
ECA’s Director, Macroeconomics and Governance Division, Adam Elhiraika, was quoted as saying at the ongoing experts meeting in Ethiopia, that the continent encountered severe developmental challenges due to increased poverty, high inequality rates and lack of decent jobs.
Speaking at the 2023 Conference of African Ministers of Finance, Planning and Economic Development, he listed the shocks include the COVID-19 pandemic impact, the Russian war in Ukrainian and resultant food and energy crisis, rising inflation, debt tightening, and extreme weather patterns.
Elhiraika said: “The result is that Africa currently accounts for the largest share of the world’s poor, with 149 million previously non-poor Africans now facing the risk of falling into poverty.
“The global picture is different. In 2022, Africa saw the fastest expansion among developing world countries after East and South Asia. This is due to improvements in East, North and West African sub-regions, which drove Africa’s overall growth.
“In 2022, an additional 18 million new poor emerged in Africa, with more than half the highest proportion of the world’s poor at 54.8%.
“This is alarming because 546 million people were living in poverty in 2022, which is more than half of the continent’s population.”
He added that women and girls remain particularly vulnerable, and the continent is facing a potential reversal of the hard-won gains made on gender equity.
The result is that Africa currently accounts for the largest share of the world’s poor, with 149 million previously non-poor Africans now facing the risk of falling into poverty.
Regional economies
Elhiraika continued: “ECA estimates that although the economic outlook remains bleak, Africa is anticipated to grow by 3.9% in 2023, especially with an unfavourable external environment created by the recession in both the United States and the Eurozone and expected to weigh on commodity prices.
“Among the top ten countries where wealth inequality is the highest, seven of them, South Africa, Mozambique, Namibia, Zambia, Botswana, Angola and Malawi, are in Southern Africa, while two are in West Africa, Guinea-Bissau, and Sao Tome.”
He noted that North Africa’s growth is expected to accelerate from 3.9% in 2022 to 4.8% in 2023 because of increased import demands in the Eurozone, increasing demand for exports, rising number of tourist arrivals and remittance inflows.
According to him, Algeria, Morocco and Tunisia are expected to experience positive effects as they conducted higher levels of trade with the Eurozone.
In Central Africa, he said strong domestic production in Cameroon and Gabon contributed to Africa’s growth in the push to respond to the global increase in oil prices.
And in West Africa, growth is estimated to rise slightly to 3.8% in 2023, with Senegal expected to continue experiencing remarkable improvements in its growth rate due to the commencement of hydrocarbon exports, coinciding with rising natural gas prices.
However, Southern Africa, led by South Africa, is projected to experience slower growth with a 2.8% average.
Inclusive macroeconomic policies
In view of the foregoing, countries were urged to pursue pro-poor and inclusive macroeconomic policies and ensure access to affordable and innovative finance for an inclusive recovery.
“Ultimately, governments need effective coordination between monetary and fiscal policy; this is critical for reducing inflation while shielding the most vulnerable households. Moreover, to make inroads in meeting the SDGs, governments need to improve macroeconomic fundamentals and deepen structural transformation,” Elhiraika said.
African countries are also charged to enhance domestic resource mobilisation, reduce illicit financial flows and integrate innovative mechanisms and instruments such as green financing and carbon markets to spur and stimulate investments, while accelerating the African Continental Free Trade Area (AfCFTA) to speed up industrialisation and diversification.
