Africa’s inflation has been projected to rise to 17.8 per cent in 2024 from 17 per cent a year earlier, before declining to 12.3 per cent in 2025.
The projection is premised on high food prices, linked to huge supply gaps and higher energy prices. Analysts at Afreximbank said despite the aggressive monetary policy stance of most central banks, inflation has remained stubbornly high because of its structural nature.
The analysts argued that Africa’s growth is expected to differ significantly across its regions and economic groupings, reflecting imbalances in domestic structures, the level of exposure to global headwinds and the ability of domestic policy to smoothen out the volatilities.
East Africa will grow the fastest (4.9 in 2024 vs 5.7 per cent in 2025). Slight growth pick-up expected in Southern and West Africa, but growth to moderate in Central and North Africa.
However, the analysts pointed out that Africa’s economy remains resilient with a growth forecast of 3.5 per cent in 2024 (vs 3.2 per cent in 2023) and four per cent in 2025, despite numerous headwinds arising from soaring food, energy prices to weak global demand weighing down export performance, declining agricultural productivity arising from climate change and extreme weather events, power generation challenges and conflict in some African countries.
They argued that Africa’s debt crisis had continued to bite harder as donors shifted from grants in the form of official development assistance (ODA) to loans.
“A recent UNCTAD report notes increased financial burden on the continent, leading to higher interest payments than investments in essential sectors like health and education. The report shows that the percentage of ODA given in the form of loans instead of grants has increased by over six per cent since 2012, pushing mostly aid-dependent economies into a debt crisis,” the report stated.
They argued that these developments and the reduction in debt relief packages are poised to mount additional pressures on African economies already struggling with elevated debts, adding that Africa’s economic outlook is positive and that growth is driven by improved commodity prices as well as investments in infrastructure projects.
They suggested that Africa’s government policies must target areas with strong growth and employment potential as well as attract private investments.
