Driving Africa's economic growth amidst global headwinds

Africa's economic landscape is facing both challenges and opportunities as the continent strives to drive its own structural transformation amidst global headwinds. According to the African Development Bank (AfDB), the continent's GDP growth rate is forecasted to reach 3.7 per cent in 2024, marking a continued resilience in real GDP growth despite macroeconomic challenges. In an exclusive interview with AfDB Chief Economist, Kevin Urama, CNBC Africa gained insights into the current state of African economies and the path forward. The key theme highlighted in the interview was the importance of reforming the global financial architecture to unlock Africa's economic potential and foster sustainable growth. Here are the key points and insights from the conversation: 1. **Resilience in GDP Growth**: Despite facing macroeconomic challenges such as inflation and currency depreciation, Africa has maintained an average GDP growth rate of 3.8 per cent over the past decade. For 2024, a growth rate of 3.7 per cent is expected, showcasing the continent's ability to weather economic storms. However, challenges such as high debt levels and structural issues persist, impacting the quality of growth and per capita GDP growth rates. 2. **Structural Transformation Concerns**: The AfDB's African Economic Outlook report highlighted concerns regarding the structural transformation of Africa's economy. While there has been a reallocation of labor from agriculture to other sectors, the quality of this transformation is under scrutiny. Unlike other regions that transition to higher productivity sectors, Africa is witnessing a shift to low to medium productivity sectors driven by push factors like climate change and rural insecurity. This trend impedes the continent's ability to maximize the value of structural transformation and achieve sustainable economic growth. 3. **Reforming Global Financial Architecture**: Urama emphasized the need for reforming the global financial architecture to address Africa's financing challenges. Africa is grappling with high-cost debt, limited access to concessional financing, and declining financial flows, posing obstacles to long-term development. Initiatives such as rechanneling Special Drawing Rights (SDRs) and leveraging capital through Multilateral Development Banks (MDBs) have been proposed to unlock affordable resources for the continent. Additionally, sound macroeconomic policy management and tax administration were highlighted as key strategies to mobilize domestic revenue and support structural transformation. In conclusion, Africa stands at a pivotal juncture where strategic reforms and collaborative efforts are needed to propel economic growth amidst global uncertainties. By prioritizing structural transformation, enhancing financial mechanisms, and fostering regional growth partnerships, the continent can navigate the current challenges and unlock its full economic potential. As Urama aptly stated, 'Sound macroeconomic policy management is key,' underscoring the importance of proactive measures to drive sustainable development in Africa.