Africa’s Pulse 2024 : a fragile economic recovery
The Africa’s Pulse report of October 2024, produced by the World Bank, reveals that Sub-Saharan Africa is facing a fragile economic recovery. While the projected growth is 3% in 2024, challenges related to inflation, budgetary imbalances, and social pressures persist. The IMF's forecasts add a note of optimism, with projected growth of 3.6% for the same year.
According to the October 2024 edition of the Africa’s Pulse report produced by the World Bank, Sub-Saharan Africa is experiencing a fragile economic recovery, with growth expected to reach 3% in 2024 (up from 2.4% in 2023). This improvement is supported by an increase in private consumption and investment. At the same time, inflation is expected to decline, from 7.1% in 2023 to 4.9% this year, and 4.6% in 2025-2026, thanks to stricter monetary and fiscal policies, currency stabilization, and a reduction in supply chain disruptions.
High debt service costs remain a major burden
Budget balances are improving, with governments striving to cut expenditures and increase revenues, but high debt service costs remain a major burden. Hampered by sluggish investments, conflicts, and climate disruptions, the region’s growth is insufficient to reduce extreme poverty.
The International Monetary Fund (IMF), for its part, predicts that the economy of Sub-Saharan Africa will grow by 3.6% in 2024, with an increase to 4.2% in 2025. This projection was presented by Abebe Aemro Selassie, director of the IMF’s Africa department, during the Regional Economic Outlook at the IMF and World Bank Group meetings in Washington, DC.
Difficult but necessary reforms
He emphasized that African countries are implementing difficult but necessary reforms to achieve macroeconomic stability. He noted that while imbalances in the region have begun to decrease, growth remains uneven. “Policymakers face a difficult balancing act between seeking macroeconomic stability, meeting development needs, and ensuring that reforms are socially and politically acceptable,” he said. He added that protecting the most vulnerable from the effects of these adjustments and implementing reforms aimed at creating jobs will be essential to garner public support.
Indeed, Sub-Saharan Africa continues to face considerable challenges, including limited economic growth, constrained financing options, and increasing social pressures. Policymakers in the region are under pressure to maintain economic stability, address societal needs, and promote growth through supportive policies.
In analyzing the regional economy, Selassie identified three main challenges as fiscal and monetary authorities develop strategies for their respective countries. “First, regional growth, which is expected to reach 3.6% in 2024, is overall low and uneven, even though it is expected to modestly improve to 4.2% the following year. Next, financing conditions remain challenging. Third, the complex interaction between poverty, limited opportunities, and weak governance – exacerbated by rising living costs and short-term challenges related to macroeconomic adjustments – continues to fuel social frustrations,” he stated.
The old development financing model is not working and, if anything, is disintegrating
Despite these difficulties, the IMF remains cautiously optimistic about the region’s economic trajectory. According to its forecasts, regional growth will benefit from policy reforms aimed at stabilizing economies and addressing long-standing development needs. However, the pace and distribution of growth will likely vary, depending on each country’s policy approaches and its ability to manage external pressures.
One of the main obstacles to faster growth remains the lack of access to affordable financing, with the IMF noting that countries are grappling with high debt burdens and rising debt service costs. “The old development financing model is not working and, if anything, is disintegrating,” Selassie observes. For countries like Kenya, where violent protests against tax increases have occurred, foreign development assistance has decreased in recent years.
Solutions lie in ensuring that poor countries continue to access low-cost development financing from bilateral and multilateral lenders. “We also need to find ways for when countries face liquidity challenges rather than solvency issues, more funding can be extended to support reforms so that they can move towards better tomorrows,” he said.
In summary, Sub-Saharan Africa, despite modest growth and structural challenges, remains on a trajectory of essential reforms to ensure a more sustainable and inclusive economic future.
Consult the report : Africa’s Pulse 2024
