Uganda ranks in top 11 African economies outpacing rest of the world

by Business Times correspondent
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At the headquarters of the African Development Bank (AfDB) in Abidjan recently, there were broad smiles, (and nothing to do with Afcon), at the revelation that Africa will account for 11 of the world’s 20 fastest-growing economies in 2024. 

The latest edition of the Macroeconomic Performance and Outlook (MPO), published by AfDB, revealed some surprises, but the gist of the report is that the continent is set to remain the second-fastest-growing region after Asia.

The top 11 African countries projected to experience strong economic performance forecast are Niger (11.2%), Senegal (8.2%), Libya (7.9%), Rwanda (7.2%), Cote d’Ivoire (6.8%), Ethiopia (6.7%), Benin (6.4%), Djibouti (6.2%), Tanzania (6.1%), Togo (6%), and Uganda at 6%.

Niger is the world’s leading producer of the highest grade uranium ores and the second largest producer of cowpeas globally, which contribute 14% to the national GDP.

During the launch of the report, AfDB Group President Dr Akinwumi Adesina said, “Despite the challenging global and regional economic environment, 15 African countries have posted output expansions of more than 5%.  We project that growth on the continent will rebound to 3.8% in 2024. We expect this growth to be broad-based, although domestic supply bottlenecks such as shortfalls in electricity generation are still lingering.”

Overall, real gross domestic product (GDP) growth for the continent is expected to average 3.8% and 4.2% in 2024 and 2025, respectively which is higher than the projected global averages of 2.9% and 3.2%.

Up to 41 countries across the continent will in 2024, achieve an economic growth rate of 3.8%, and in 13 of them, growth will be more than one percentage point higher than in 2023.

East Africa will continue to lead Africa’s growth momentum, with growth projected to rise to 5.1% in 2024 and 5.7% in 2025, supported by strong strategic investments to improve internal connectivity and deepen intra-regional trade.

Successive adverse weather conditions in North Africa and macroeconomic challenges will hold the region’s growth steady at 3.9% in 2024 with a slight improvement to 4.1% in 2025.

Growth in Central Africa is forecast to moderate to 3.5% in 2024 but projected recovery in private consumption and increases in mining investment and exports could help push growth to 4.1% in 2025.

In Southern Africa, growth will remain sluggish at 2.2 and 2.6% in 2024 and 2025, respectively. This reflects continued economic weakness in South Africa, the region’s largest economy.

For West Africa, growth is projected to pick up to 4% and 4.4% in 2024 and 2025 respectively. Strong growth in most countries in the region is projected to offset slowdowns in Nigeria and Ghana. However, the announced withdrawal of Burkina Faso, Mali, and Niger from the Economic Community of West African States (ECOWAS) casts a shadow over the sustainability of gains amid growing uncertainty.

The MPO is a biannual publication released in the first and third quarters of each year to complement the existing African Economic Outlook (AEO), which focuses on key emerging policy issues relevant to the continent’s development.

It provides an up-to-date evidence-based assessment of the continent’s recent macroeconomic performance and short-to-medium-term outlook amid dynamic global economic developments.

The authors in the latest edition are calling for cautious optimism given the challenges posed by global and regional risks. These risks include rising geopolitical tensions, increased regional conflicts, and political instability—all of which could disrupt trade and investment flows, and perpetuate inflationary pressures.

Presenting key findings of the report, Prof. Kevin Urama, AfDB Chief Economist and Vice President, said: “Growth in Africa’s top-performing economies has benefitted from a range of factors, including declining commodity dependence through economic diversification, increasing strategic investment in key growth sectors, and rising both public and private consumption, as well as positive developments in key export markets.”  

He said: “Africa’s economic growth is projected to regain moderate strength as long as the global economy remains resilient, disinflation continues, investment in infrastructure projects remains buoyant, and progress is sustained on debt restructuring and fiscal consolidation.”

However, Prof Jeffrey Sachs, the Director of the Center for Sustainable Development at Columbia University said long-term affordable financing must be part of Africa’s strategy to achieve growth of 7% or more per year. He warned that Africa is paying a very high-risk premium for debt financing.

“Long-term development cannot be based on short-term loans. Loans to Africa should be at least 25 years or longer. Short-term borrowing is dangerous for long-term development. Africa must act as one, in scale,” he said.

According to the report, the improved growth figure for 2024 reflects concerted efforts by the continent’s policymakers to drive economic diversification strategies focused on increased investment in key growth sectors, as well as the implementation of domestic policies aimed at consolidating fiscal positions and reversing the increase in the cost of living and boosting private consumption.

Ambassador Albert Muchanga, the Commissioner for Economic Development, Trade, Tourism, Industry and Minerals at the African Union Commission said, “The future of Africa rests on economic integration. Our small economies are not competitive in the global market. A healthy internal African trade market can ensure value-added and intra-African production of manufactured goods.” 

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