In 2024, Africa is projected to be the world’s second-fastest-growing major economy, as stated by the Economist Intelligence Unit (EIU), the research and advisory arm of the Economist Group. With a population surpassing 1.2 billion, the continent is anticipated to surpass North America, South America, Antarctica, Europe, and Australia in terms of economic growth, trailing only behind Asia, primarily driven by the economic powerhouses of China and India.
The EIU’s insights into Africa’s economic future are encapsulated in its recent report titled “Africa Outlook 2024: Strong Growth Amid Heated Elections and Financial Woes.”
Despite facing external challenges such as the impact of the COVID-19 pandemic, the Russia-Ukraine conflict, increasing debt, and inflation, Africa is expected to exhibit a positive growth narrative in the coming year. The EIU’s report forecasts, “We anticipate that Africa will be the world’s second-fastest-growing major region in 2024, trailing only behind Asia, driven by China and India.
” The majority of African nations are expected to contribute to this growth, with only Sudan, ravaged by conflict, and economically challenged Equatorial Guinea projected to contract in 2024.
The research firm utilized various tools to assess the macroeconomic strength of nations and found that 12 out of the world’s 20 fastest-growing economies in 2024 will be in Africa. Notably, the continent, rich in natural resources, is expected to push up its real GDP, with growth projected to rise from 2.6 percent in 2023 to 3.2 percent in 2024.
The EIU counsels foreign investors and economic observers to pay attention particularly on East African nations, particularly Kenya, Ethiopia, Uganda, Rwanda, and Tanzania.
The report indicates that East Africa is poised to be the most dynamic part of the continent in terms of economic growth, driven by a robust services sector encompassing resurgent travel, tourism, and hospitality, resilient transport and logistics, and vibrant financial and telecommunications industries.
Economies in Africa heavily reliant on resources and major commodity exporters are expected to flourish, fueled by intense competition and high prices for hydrocarbons, mining sector output, and agricultural produce. Substantial investments are expected to flow into Africa’s energy sector ventures, as well as minerals and metals crucial to the global energy transition and digital transformation.
However, the EIU issues a cautionary note about the substantial risk Africa faces in achieving its 2024 economic growth projections due to the strain from excessive external debt.
The report underscores that this debt pressure, compounded by recent shocks like the COVID-19 crisis and adverse weather conditions, may impede Africa’s attainment of its growth targets for 2024.
The report states, “African nations will experience the financial squeeze caused by excessive debt and a heavy debt-repayment burden in 2024, impacting economic growth and stability in some countries.”
It emphasizes that elevated external debt, coupled with fallout from recent shocks, including the COVID-19 pandemic, Russia’s invasion of Ukraine, and adverse weather conditions linked to global climate change, has exposed Africa’s debt vulnerabilities in 2023.
These risks are anticipated to escalate in 2024 without external debt restructuring.
For example, Kenya faces a significant financial event in 2024, with a June 24th deadline to redeem a US$2bn Eurobond in a single bullet payment, in addition to other debt-servicing commitments.
