Addressing multiple shocks will grow Africa’s economy – ECA
The Economic Commission for Africa (ECA) said Africa’s economy could experience positive growth if its multiple shocks were adequately addressed.
In a statement, Mr Adam Elhiraika, ECA Director, Macroeconomics and Governance Division, said this at the ongoing experts meeting in Ethiopia.
Elhiraika said an overview of the recent economic and social developments in Africa by ECA centred on the complex economic and financial picture on the confluence of shocks that slowed down the global economy.
He said these shocks included the COVID-19 pandemic impact, the rise in prices fueled by Ukraine’s conflict, and extreme weather patterns.
“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.
“We can project, based on our analysis, that East African countries will continue to show improvements, driven by the rebound of service and industrial activity.
“Higher State spending, increased trade, recovery of the tourism sector, closer regional linkages through the East African Community and increased infrastructure investments will also drive improvement,” Elhiraika said.
He said North Africa’s growth was expected to accelerate from 3.9 per cent in 2022 to 4.8 per cent in 2023 because of increased import demands in the Eurozone.
According to the director, this will increase demand for exports from North African countries, adding that the number of tourist arrivals and remittance inflows will also rise.
Elhiraika explained that Algeria, Morocco and Tunisia were expected to experience positive effects as they conducted higher levels of trade with the Eurozone.
He said that in Central Africa, strong domestic production in Cameroon and Gabon contributed to Africa’s growth in the push to respond to the global increase in oil prices.
He said Senegal, in West Africa, was expected to continue experiencing remarkable improvements in its growth rate in 2023.
The director said this was due to the commencement of hydrocarbon exports, coinciding with rising natural gas prices.
He said West Africa’s growth would rise slightly to 3.8 per cent in 2023, while Southern Africa, led by South Africa, would have slow growth with a 2.8 per cent average.
“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.
“They also need 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.
“The African Continental Free Trade Area (AfCFTA)must be accelerated to speed up industrialisation and diversification”.
Elhiraika said change needed to go beyond the national level.
According to him, reforming the global financial architecture is key to accessing the much-needed affordable long-term financing with better lending terms by multilateral development banks.
“Liquidity and Sustainability Facility and the Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative could grant access to lower borrowing costs and allow African Governments to meet the SDGs”.