Dabalen: Sub-Saharan Africa GDP will go to 4% in 2025-2026

In a special first on CNBC Africa, Godfrey Mutizwa sat down with Andrew Dabalen, the World Bank Chief Economist for Africa, to delve into the 30th edition of Africa's Pulse, recently launched. The World Bank forecasts a 3% expansion in economic activity across the continent in 2024, with Dabalen emphasizing the pivotal role of the youth in driving this growth trajectory. Dabalen highlighted the positive performance of several African countries in terms of growth rates surpassing pre-pandemic levels, citing 26 out of 48 countries in Africa outperforming the period from 2016 to 2019. Countries like Rwanda, Kenya, and Uganda are demonstrating notable resilience, sustaining growth rates around five to six percent. However, challenges persist, particularly in countries like Nigeria, Ethiopia, and Ghana, grappling with double-digit inflation rates. Dabalen stressed the importance of addressing inflation to foster economic activity and uplift the entire region. The conversation pivoted to economic powerhouses South Africa and Nigeria, which are undergoing transformative reforms to overcome obstacles such as transportation and energy issues. While acknowledging the strenuous reform efforts in these countries, Dabalen highlighted the need for deeper reforms across the continent to bolster sustained growth. Despite the severity of these reforms, Dabalen remains optimistic about the commitment of policymakers to drive meaningful change and address the growing demands of African youth seeking economic opportunities. The discussion then turned to monetary policy responses, with Dabalen noting the varied approaches adopted by central banks. While some countries are lowering interest rates to stimulate economic activity, others are adopting a cautious approach in light of global economic uncertainties. Notably, Kenya and Ghana have reduced interest rates, signaling a positive trend in the macroeconomic landscape. Dabalen addressed the academic dilemma of coordinating monetary policy across diverse African economies, citing challenges due to differing economic structures. Transitioning to the pressing issue of mounting debt levels in Africa, Dabalen underscored the significance of resolving the debt burden to unlock growth potential. With African countries allocating a significant portion of revenues towards interest payments, tough choices between debt obligations and critical investments in education, health, and infrastructure are being faced. Dabalen emphasized the detrimental impact of conflict and climate change on economic growth, with conflicts displacing populations and disrupting production, while climate change-induced droughts exacerbate economic vulnerabilities. The conversation honed in on the transformative role of education in driving Africa's economic development. Dabalen stressed the need for a paradigm shift towards enhancing learning outcomes, focusing on foundational education, teacher training, infrastructure improvements, and effective monitoring and assessment mechanisms. Smart spending on education, coupled with investments in quality teaching and infrastructure, will be pivotal in fostering a skilled workforce and driving sustainable economic growth in Africa. In conclusion, Dabalen's insights underscore the critical importance of investing in youth empowerment and education to unlock Africa's growth potential and steer the continent towards a prosperous future.