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Africa growth too weak to drive higher standards of living, say IMF, ACG

By Clara Nwachukwu 

The International Monetary Fund (IMF), and the African Consultative Group (ACG), yesterday declared that despite projected growths for the 2024 and 2025 financial year, these are still too weak to spur higher standards of living in Africa.  

In a joint statement signed by the IMF Managing Director, Kristalina Georgieva, and Nigeria’s Minister of Finance and ACG Chair, Wale Edun, the parties admitted that many countries in the continent are anticipating higher growths.

They said: “Nearly two thirds of the countries on the continent are anticipating higher growth this year, on the back of the modest easing in global financial conditions and a recovery in private investment and consumption.

“In addition, some countries have returned to international capital markets after almost a two-year hiatus.”

Indeed, the outlook for Africa is also gradually improving with growth expected to reach 3.5% in 2024 and 4.0% in 2025.

However, they said that “Despite these glimmers of hope, growth is still too weak to secure improvements in standards of living and there is a growing income divergence between the continent and more advanced countries post-pandemic.”

This, according to them, is because “Many governments in Africa continue to grapple with financing shortages, whereas high debt service costs reduce budgetary space for priority investment and social spending and limit countries’ ability to deal with future shocks.

“At the same time, some countries continue to experience climate shocks such as severe droughts and floods which exacerbate food insecurity and poverty.”

As a result, the Group called for “strengthening of Africa’s resilience to surmount the multi-faceted challenges facing the continent.”

Despite these glimmers of hope, growth is still too weak to secure improvements in standards of living and there is a growing income divergence between the continent and more advanced countries post-pandemic.

They added that “Countries’ domestic adjustment policy efforts and structural reform agendas stand to yield better outcomes if accompanied by access to adequate and affordable financing.”

The ACG also underlined the necessity for the upcoming review of low income countries (LICs) facilities to adapt to the changing global environment to continue serving vulnerable members.

The Group also stressed the need to keep all financing options on the table and encouraged coordination with the World Bank’s 21st Replenishment of the International Development Association (IDA21).

They further agreed to continue to work together to capture the new opportunities brought about by the climate transition and the digital transformation, especially the arrival of artificial intelligence (AI).

They added that “Resilience is also important to deliver on climate ambitions, both Nationally Determined Contributions (NDC) and the African Union’s Agenda 2063.

“As such, the Fund and other partners should help the continent tap into green financing.”

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