Africa’s economic growth could decelerate to 4.1% in 2022, and remain stuck there in 2023, because of the lingering pandemic and inflationary pressures caused by the Russia-Ukraine war, as both countries are major grain suppliers to the continent.
Africa’s gross domestic product (GDP), was said to have recovered strongly in the last year, but the lingering effects of the Covid-19 pandemic, Russia’s invasion of Ukraine and the ensuing war could pose considerable challenges in the medium term.
This is according to the 2022 African Economic Outlook, released yesterday by the African Development Bank (AfDB).
The Outlook revealed that Africa’s GDP grew by an estimated 6.9% in 2021, following the challenges from a pandemic-induced contraction of 1.6% in 2020.
It also noted that rising oil prices and global demand have generally helped improve Africa’s macroeconomic fundamentals.
Africa will need at least $432 billion to address the effects of COVID-19 on its economies and on the lives of its people — resources it does not have.
AfDB President, Dr Akinwumi Adesina, said international efforts, including the Bank Group’s $1.5 billion African Emergency Food Production Facility, the G20 Common Framework for Debt Treatment, and the $650 billion in Special Drawing Rights (SDRs) issued by the International Monetary Fund (IMF), are supporting the continent’s recovery.
However, he said the recovery will still be costly. “Africa will need at least $432 billion to address the effects of Covid-19 on its economies and on the lives of its people — resources it does not have,” Adesina said.
Climate resilience
Themed, “Supporting Climate Resilience and a Just Energy Transition in Africa,” the Outlook, launched at the ongoing AfDB Group Annual Meetings in Accra, Ghana, highlights a growing threat to lives and livelihoods in Africa.
Acting Chief Economist and Vice President, Kevin Urama said: “Climate change is the most existential challenge to Africa’s development today. Finding policies that address climate adaptation and mitigation of greenhouse gas emissions while ensuring social and economic development, is one of the most enduring policy challenges of our time.”
Urama noted that: “The African Economic Outlook report 2022 provides evidence-based policy options for driving inclusive growth by building climate resilience and a just energy transition in Africa.”
The African Economic Outlook reveals that “around 30 million people in Africa were pushed into extreme poverty in 2021, and about 22 million jobs were lost in the same year because of the pandemic; and the trend is expected to continue through this second half of 2022 and on into 2023.
“The economic disruptions stemming from the Russia-Ukraine war could push a further 1.8 million people across the African continent into extreme poverty in 2022. That number could swell with another 2.1 million in 2023.
“The continent’s additional financing needs for 2020-22 are estimated at $432 billion. Financing African countries’ nationally determined contributions—public pledges from countries on how they plan to play a part in post-2020 collective action on climate change—will require up to $1.6 trillion between 2022 by 2030.”
Furthermore, despite being the least emitter, Africa is said to be disproportionately affected by climate change, and loses between 5% and 15% of its GDP to this phenomenon.
“Collectively, African countries received only $18.3 billion in climate finance between 2016 and 2019. This leaves a climate finance gap of up to $127.2 billion annually from 2020 to 2030,” it adds.
The report estimates that Africa will have a carbon credit of up to $4.8 trillion by 2050, based on the current social cost of carbon, and underscores its vulnerability to climate change. In 2020 and 2021, Africa recorded 131 extreme-weather and climate change-related disasters.
Collectively, African countries received only $18.3 billion in climate finance between 2016 and 2019. This leaves a climate finance gap of up to $127.2 billion annually from 2020 to 2030.
The report calls on the international community to meet commitments such as the $100 billion annual financing promised by rich nations to support climate action in developing countries. It records the billions of dollars lost to climate events each year in Africa, as well as the economic prospects of green growth.
It suggests, for example, that Africa could gain about 20.5 million more jobs by 2050, if the world adjusts its energy consumption and manages to maintain global warming at 1.5 degrees Celsius above pre-industrial levels.
The 2022 Outlook proposes a series of policy recommendations to build back better and engender resilient economies in Africa.
These include speeding up COVID-19 vaccination and delivering strong support to domestic pharmaceutical industries; reducing reliance on single food sources; and revisiting global debt frameworks.
