Home to almost 60% of Africa’s population, the Eastern and Southern Africa (AFE) region is geographically, culturally, and economically diverse and comprises 26 countries stretching from the Red Sea in the North to the Cape of Good Hope in the South. The region had an estimated gross domestic product (GDP) of $1,917,904 million with South Africa as the region’s largest economy followed by Angola, Kenya, and Ethiopia. Seychelles and Mauritius are the region’s only high-income economies.
The Eastern and Southern Africa region boasts some of the world’s richest natural resources. The Democratic Republic of Congo (DRC) produces much of the world’s mined cobalt, and Angola leads the region in the production of crude oil. For many East African countries, agricultural products are the main export commodities: Ethiopia and Uganda lead the region in coffee exports while Kenya is the largest tea exporter. For countries in Southern Africa, precious metals and minerals are the biggest exports, including gold and diamonds from South Africa and platinum from Zimbabwe.
While much of Africa’s population lives in rural areas, Eastern and Southern African cities continue to grow. In South Africa, nearly half of the population lives in urban areas such as Johannesburg, the country’s largest city. However, this does not translate into a reduction in poverty. South Africa remains a dual economy and is one of the most unequal countries in the world.
With nearly half the population under 18, people are Africa’s greatest resource. In April 2019, the World Bank launched the ambitious Africa Human Capital Plan (AHCP) to boost Africa’s potential through the health, knowledge, skills, and resilience of its people. At the core of this $2.2 billion initiative is the push for greater women’s empowerment and gender equality. As of June 2022, there was more than $11.5 billion invested in women’s empowerment projects across the region via the AHCP.
Development Challenges and World Bank Support
Eastern and Southern African economies were well on their way toward recovery from the turbulence of the COVID-19 pandemic, but the war in Ukraine last year created a daunting set of woes whose effects continue to reverberate throughout the region. These include soaring commodity prices and food shortages in a region that is already in the grip of worsening food insecurity, debt distress, and devastating climate shocks, including the worst drought in the last four decades.
However, the economic performance of Sub-Saharan Africa is not uniform across subregions and countries. The real GDP growth of Eastern and Southern Africa is estimated to decline to 3.1% in 2023, from 3.6% in 2022, as compared to the Western and Central Africa (AFW) subregion, which faces an estimated decline to 3.5% in 2023 from 3.7% in 2022. The region’s performance is still dragged down by lower long-term growth in the largest countries on the continent. Economic activity in South Africa is set to weaken further in 2023 (0.8%) as the energy crisis deepens, while the growth recovery in Nigeria for 2023 (2.8%) is still fragile as oil production remains subdued and the new administration faces many policy challenges. Despite these challenges, many countries in the region are showing resilience amidst multiple crises. These include Kenya and the DRC which grew at 5.2% and 8.6% respectively in 2022. In the DRC, the mining sector was the main driver of growth due to an expansion in capacity and recovery in global demand. Harnessing natural resource wealth provides an opportunity to improve fiscal and debt sustainability of African countries, but this can only happen if countries get policies right and learn the lessons from the past boom and bust cycles.
The World Bank is working closely with country leaders, civil society, development partners, and young people in Eastern and Southern Africa to chart a brighter course for the future. It is also working with regional economic organizations, which play a strong role in helping countries reach their development potential. These include the Common Market for Eastern and Southern Africa, the East African Community, and the Southern African Development Community. The Indian Ocean Rim Association supports countries bordering the Indian Ocean and the Intergovernmental Authority on Development covers the Horn of Africa, which includes Djibouti.
Rising Food Insecurity
Record high international food and fuel prices—especially during the first quarter of 2022—triggered a global crisis that is threatening to increase extreme poverty, worsen hunger and nutrition, and redirect already limited fiscal resources. At least 36.1 million people across the Horn of Africa are severely food insecure as Ethiopia, Kenya, and Somalia experience the worst drought in 40 years. In March 2023, Cyclone Freddy, the longest-lasting tropical cyclone ever recorded in the Southern Hemisphere, hit Malawi and Mozambique, and in its aftermath, the region saw the prices of food staples such as maize soar to 300% higher, worsening levels of food insecurity as families struggle to meet their food needs. In June 2022, the World Bank approved a $2.3 billion program to help countries in Eastern and Southern Africa tackle growing food insecurity via the Food Systems Resilience Program for Eastern and Southern Africa (FSRP). The program is enhancing response strategies in the food crisis and includes a Contingent Emergency Response Component (CERC) to provide agile funding to the region.
Increasing Climate Shocks
A combination of water stresses like crippling droughts and devastating floods, and rapidly rising temperatures are hitting African economies hard, with Southern Africa experiencing increases in temperature of up to 2°C over the past century. In June 2022, the World Bank approved the Horn of Africa Ground Water for Resilience Project (HoAGWRP), a new multi-phase project benefitting from $385 million in International Development Association (IDA) financing to boost the region’s capacity to adapt to climate change. It also committed $327.5 million through the De-risking, Inclusion, and Value Enhancement of Pastoral Economies in the Horn of Africa (DRIVE) Project to cushion pastoralists in Djibouti, Ethiopia, Kenya, and Somalia from the impacts of drought and better connect them to markets. The project will enable the region to adapt to the impacts of climate change, commercialize livestock production in pastoralist communities, and ensure inclusion of the marginalized and vulnerable groups such as women in the sector.
Expanding Access to Electricity
Access to affordable, reliable, and modern energy is essential to the development of Africa’s infrastructure ecosystem. Over a half billion people in Sub-Saharan Africa will still be without electricity in 2030 unless the current electrification pace is tripled. In November 2022, World Bank announced an innovative initiative to accelerate the pace of electrification in Africa to achieve universal access by 2030. The World Bank along with the Multilateral Investment Guarantee Agency (MIGA), the International Finance Corporation (IFC), and other development agencies announced private investment in distributed renewable energy (DRE) systems to electrify targeted areas quickly and efficiently. The World Bank has an active portfolio of $2.7 billion for DRE access, targeting electrification of about 40 million people.
In Rwanda, we have supported long-term, programmatic approaches through the last decade to help the country adopt an integrated electrification approach that allowed it to scale up rapidly both grid and off-grid electrification, and in both cases develop targeted interventions to make sure that electricity services are affordable for the poor, whether households are on- or off-grid. In Mozambique, we are also supporting an integrated grid and off-grid approach, using off-grid solutions to reach displaced people and host communities in conflict areas. Lastly, we are preparing new operations focusing on off-grid in fragile places such as South Sudan.
Establishing a Digital Africa
Digital technologies (DTs) have emerged as an essential element of a good-jobs strategy for African countries and they are a historic opportunity for the continent to leapfrog into the fast-growing $11.5 trillion global digital economy. In fragile contexts, digital technology solutions can help deliver services to the poor when more traditional methods cannot, e.g., mobile money vs. more traditional solutions. According to our new report, Digital Africa, internet use significantly increases inclusive jobs on the continent, which is poised to have the largest workforce in the world by 2100 relative to other regions. When fast internet becomes available, the probability that an individual is employed increases by up to 13.2%, total employment per firm increases by up to 22%, and firm exports nearly quadruple. To transform internet availability into productive usage and job growth, the region needs affordable access, digital skills, and digital technologies that meet the needs of Africans.
The arrival of fast-speed internet cables in Africa, supported by the World Bank Group in 20+ countries over the past 15 years, has already had a significant impact on firm productivity, exports, and job creation. Over IDA19 (FY21-22) alone, the World Bank has developed over 40 digitalization projects for a total of $4.5 billion in 29 Sub-Saharan countries to support the building of digital economy foundations, including digital connectivity, digital public infrastructure, digital businesses, and digital skills. In FY23, the World Bank has started to accelerate scaling up its support to governments to enable digital transformation and aims to commit half of its $14 billion in investments over FY23-25 to Africa.
Regional integration is key to Africa’s recovery efforts and offers considerable potential for economic growth through markets and trade reforms, as well as an opportunity to mitigate conflicts across the region. The World Bank Group remains one of the key contributors to Africa’s regional integration. The current World Bank Regional Integration portfolio supported by IDA amounts to over $16 billion (in 2022), including more than 90 projects, and representing about 13% of the World Bank’s total portfolio for Africa. The updated World Bank Group’s regional integration strategy (2021-2023) has stepped up to support the region, releasing over $8 billion in additional funding through 2023 to help the continent recover from the pandemic and achieve its economic transformation. The strategy also supports regional connectivity, trade and market integration, human capital development, and greater resilience. Special focus is on cross-border approaches to bring countries and partners together to address common challenges in the fragility hotspots of the Horn of Africa and the Great Lakes.
Regional integration will get a major boost from the roll out of the African Continental Free Trade Area (AfCFTA), a pact which simplifies and harmonizes trade and transit procedures. If fully implemented, AfCFTA could raise incomes by 9% by 2035 and lift 50 million people out of extreme poverty, according to a new World Bank report done in partnership with the AfCFTA Secretariat.
In July 2022, the World Bank approved a $100 million support program for the Africa Centres for Disease Control (Africa CDC) to help strengthen the institution’s technical capacity and institutional framework to support African countries in preparing for, detecting, and responding to disease outbreaks and public health emergencies. Burundi, the DRC, and neighboring countries within the Great Lakes Region of Eastern Africa are set to benefit from the World Bank’s new Great Lakes Trade Facilitation and Integration Project which provides $250 million in financing aimed at facilitating cross-border trade and targeting small-scale and women traders in the borderlands of the Great Lakes Region.
Research and Analysis
Knowledge is essential for governments to make better, evidence-based policies and for institutions to make aid more effective. Our most recent regional studies can be found below, and analytical work by country is published on each country’s website.
Recent research includes:
- Digital Africa: Technological Transformation of Jobs
- April 2023 Edition - Africa’s Pulse: Leveraging Resource Wealth During the Low Carbon Transition
- Making the Most of the African Continental Free Trade Area: Leveraging Trade and Foreign Direct Investment to Boost Growth and Reduce Poverty
- Invisible Bonds: Transboundary Resilience Building in the Horn of Africa - Lessons from World Bank Regional Projects and Advisory Services and Analytics
- Infrastructure and Structural Change in the Horn of Africa
- The Impact of Internet Access on Innovation and Entrepreneurship in Africa
Last Updated: Apr 05, 2023