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Sub-Saharan Africa, home to more than 1 billion people, half of whom will be under 25 years old by 2050, is a diverse continent offering human and natural resources that have the potential to yield inclusive growth and eradicate poverty in the region. With the world’s largest free trade area and a 1.2-billion-person market, the continent is creating an entirely new development path, harnessing the potential of its resources and people.

The region is composed of low, lower-middle, upper-middle, and high-income countries, 22 of which are fragile or conflict-affected. Africa also has 13 small states, characterized by a small population, limited human capital, and a confined land area.

Economic growth in Sub-Saharan Africa (SSA) slowed to 3.6% in 2022, from 4.1% in 2021; and economic activity in the region is projected to further slow down to 3.1% in 2023. The persistent sluggishness of the global economy, declining yet high inflation rates, and challenging global and domestic financial conditions amid high levels of debt explain the downgrade. Growth is estimated to pick up to 3.7% and 3.9% in 2024 and 2025, respectively—thus signaling that the slowdown in growth should be bottoming out this year. Growth conditions, however, remain insufficient to reduce extreme poverty and boost shared prosperity in the medium to long term. The slow recovery of per capita income growth, at 1.2% next year and 1.4% in 2025, still falls short of accelerating poverty reduction to the region’s pre-pandemic path.

The economic growth in SSA is not uniform across subregions and countries. The GDP growth of Western and Central Africa is estimated to decline to 3.4% in 2023, from 3.7% in 2022, while that of Eastern and Southern Africa declines to 3.0% in 2023, from 3.5% 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 (0.5%) as the energy crisis deepens, while the growth recovery in Nigeria for 2023 (2.8%) is still fragile as oil production remains subdued. Among the 10 largest economies in SSA—which represent more than three-quarters of the region’s GDP—eight are growing at rates that are below their long-term average growth, including Sudan, Nigeria, Angola, and Ethiopia.

Public debt in SSA has more than tripled since 2010. The war in Ukraine halted the fiscal consolidation process of many countries in the region that started in the aftermath of the COVID-19 pandemic. As countries increasingly resorted to measures such as subsidies, temporary waivers of tariffs and levies, and income support for the most vulnerable people—in an effort to limit the rise of food and fuel prices—the fiscal deficit of the region widened to 5.2% of GDP in 2022, up from the estimated 4.8% of GDP in 2021. Weak growth combined with a fast accumulation of public debt has pushed the median public debt-to-GDP ratio from 32% in 2010 to 57% in 2022 (56% in Western and Central Africa; 64% in Eastern and Southern Africa). The number of SSA countries at high risk of external debt distress or already in debt distress stands at 22 (up from 20 in 2020).

Stubbornly high inflation fueled by rising food and energy prices as well as weaker currencies and low investment growth continues to constrain African economies, creating uncertainty for consumers and investors. The number of countries with two-digit average annual rates of inflation increased from 9 in 2021 to 21 in 2022. Although headline inflation appears to have peaked in the past year and the number of countries with two-digit inflation is expected to drop to 12 in 2023, inflation in SSA is set to remain high at 7.5% for 2023, and above central bank target bands for most countries. Investment growth in SSA fell from 6.8% in 2010-2013 to 1.6% in 2021, with a sharper slowdown in Eastern and Southern Africa than in Western and Central Africa.

Despite these challenges, a number of countries in the region are showing resilience amidst multiple crises. These include Kenya, Cote d’Ivoire, and the Democratic Republic of Congo (DRC) which grew at 5.2%, 6.7%, and 8.6% respectively in 2022. Economic growth in the region excluding large countries, such as Angola (projected growth: 2.6% in 2023), Nigeria (projected growth: 2.8% in 2023), and South Africa (projected growth: 0.5% in 2023), is estimated at 4.3% in 2023, and set to expand to 5.1% and 5.2% in 2024 and 2025, respectively. Non-resource-rich countries are projected to grow 4.2% in 2023 and to pick up to 5.1% and 5.3% in 2024 and 2025, respectively. The stronger performance of non-resource-rich countries can be attributed to gains enjoyed from lower import bills and an expansion in services. Real GDP growth in resource-rich countries will remain subdued, at 2.4% in 2023, but will rebound slightly to 2.9% and 3.0% in 2024 and 2025, respectively—still below the growth rate of 3.7% in 2021. Growth for this group of countries is dragged down by lower commodity prices, pointing to strong dependence on the extractive sector. Weak economic performance is expected among CEMAC countries in 2023 (2.7%), while growth of WAEMU countries is expected at 5.5% in 2023, and these countries will grow at a faster pace in 2024 (7.0%).

Harnessing the potential of natural resources provides an opportunity to improve the fiscal and debt sustainability of African countries. Natural resources (oil, gas, and minerals) offer a huge economic opportunity for SSA economies during the low carbon transition. Tapping into energy resources can improve energy access. Africa faces a significant challenge to meet its universal, high-quality energy access goals. In 2022, 600 million people in Africa, or 43% of the continent, lacked access to electricity. However, Africa’s resource base and associated investments could help accelerate progress by developing diverse energy sources. Because many natural resource projects are located in remote and rural communities, the scale-up of green energy investments and regional infrastructure could be leveraged to alleviate rural poverty and promote productivity gains.

African countries can leverage their resources to bring together gas and renewable energy to meet domestic needs. Prioritizing inward investments in newly discovered and underdeveloped natural gas reserves can mobilize export revenues and spur domestic energy production and access. In addition, regional integration and the implementation of a continental free trade area hold huge potential to spur economic transformation across SSA. A just transition for Africa will depend on successfully harnessing the economic benefits from oil, gas, and mineral resources, including good governance and sound macro-fiscal management of resource revenues, while also preparing for a low-carbon future. Effective management of natural resource wealth can unlock significant opportunities for job creation, value addition, and investments in human development. Given the extent of natural resource abundance, this wealth can play a central role in the transformation for Africa’s economic future.

Last Updated: Apr 05, 2023

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