African economies to grow at 3.4% in 2024- World Bank

The World Bank has projected that growth will rebound in African economies from 2.6 per cent in 2023 to 3.4 per cent in 2024 and 3.8 per cent in 2025.

This is contained in a statement issued by the World Bank on its latest Africa’s Pulse Report released on Tuesday.

The report said increased private consumption and declining inflation were supporting an economic rebound in Sub-Saharan Africa.

It, however, said the recovery remained fragile due to uncertain global economic conditions, growing debt service obligations, frequent natural disasters, and escalating conflict and violence.

“However, this recovery remains tenuous. While inflation is cooling across most economies, falling from a median of 7.1 to 5.1 per cent in 2024, it remains high compared to pre-COVID-19 pandemic levels.

“Additionally, while growth of public debt is slowing, more than half of African governments grapple with external liquidity problems and face unsustainable debt burdens.

“Overall, the report underscores that in spite of the projected boost in growth, the pace of economic expansion in the region remains below the growth rate of the previous decade (2000-2014).

“This is insufficient to have a significant effect on poverty reduction.

“Moreover, due to multiple factors including structural inequality, economic growth reduces poverty in Sub-Saharan Africa less than in other regions.”

The report said transformative policies were needed to address deep-rooted inequality to sustain long-term growth and effectively reduce poverty.

The statement quoted Andrew Dabalen, World Bank Chief Economist for Africa as saying:

“Per capita Gross Domestic Product (GDP) growth of one per cent is associated with a reduction in the extreme poverty rate of only about one per cent in the region, compared to 2.5 per cent on average in the rest of the world.

“In a context of constrained government budgets, faster poverty reduction will not be achieved through fiscal policy alone.

“It needs to be supported by policies that expand the productive capacity of the private sector to create more and better jobs for all segments of society.”

The report highlighted that external resources to meet gross financing needs of African governments were shrinking and those available were costlier than they were before the pandemic.

“Political instability and geopolitical tensions weigh on economic activity and may constrain access to food for an estimated 105 million people at risk of food insecurity due to conflict and climate shocks.

“African governments’ fiscal positions remain vulnerable to global economic disruptions, necessitating policy actions to build buffers to prevent or cope with future shocks.

“What’s more, inequality in Sub-Saharan Africa remains one of the highest in the world, second only to the Latin America and Caribbean region, as measured by the region’s average Gini coefficient.

It stated that access to basic services, such as schooling or healthcare, remained highly unequal in spite of recent improvements.

“Disparities also exist in access to markets and income-generating activities, irrespective of people’s skills. Taxes and poorly targeted subsidies may also have an outsized impact on the poor.”

The report called for several policy actions to foster stronger and more equitable growth.

“These include restoring macro-economic stability, promoting inter-generational mobility, supporting market access, and ensuring that fiscal policies do not overburden the poor.”