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AfDB Annual Meetings: Urama: African economies continue to show resilience amid global headwinds
Today marks the 60th anniversary of Africa Day, in celebrating this year’s theme of Embracing 'Our Africa, Our Future. CNBC Africa interviewed Kevin Urama, Chief Economist at the African Development Bank discussing the opportunity in renewable energy and resolving Africa's gloomy outlook.
Thu, 25 May 2023 13:29:07 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Africa's economy showcases resilience amidst global challenges and is projected to rebound with a growth rate of 4.4% by 2024, outpacing the global average.
- The focus on mobilizing private sector financing for climate and green growth in Africa aims to bridge the continent's $2.7 trillion financing gap required for climate action by 2030.
- East Africa emerges as a regional bright spot, while heavyweight economies like Nigeria and South Africa face structural challenges hindering their growth potential.
Africa's economy has showcased remarkable resilience amidst a myriad of global challenges, including the ongoing aftermath of the COVID-19 pandemic, the war in Ukraine affecting energy prices, and other conflicts worldwide. Despite these hurdles, African economies are projected to slow slightly in 2022 before rebounding with a growth rate of 4.4% by 2024, outpacing the global average. The continent's macroeconomic fundamentals are on an upward trajectory, with fiscal deficits narrowing and several African countries expected to join the list of the 10 fastest-growing nations worldwide. This positive outlook comes as a result of macroeconomic policy reforms implemented over the past decade, commending the leaders for their efforts and progress.
The key theme of the African Development Bank's annual meeting is centered around mobilizing private sector financing for climate and green growth in Africa. By leveraging private sector investments, the continent aims to bridge the financing gap required to implement climate action plans. With Africa needing $2.7 trillion by 2030 to fulfill its climate commitments, the focus is shifting towards attracting private capital. Despite misconceptions surrounding risk factors, the continent boasts the lowest default rate on infrastructure projects globally, highlighting its potential to attract investments.
Chief Economist at the African Development Bank, Kevin Urama, addressed the 'green growth paradox' in Africa, noting the continent's abundance of renewable energy resources yet its lagging performance in green growth indicators. While Africa holds significant potential in renewable energy and mineral deposits essential for green transitions, internal reforms are necessary to de-risk the business environment and attract private sector investors.
East Africa emerges as a regional bright spot, sustaining growth rates of over 5% and escaping recession during the peak of the COVID-19 pandemic. The region's diversified economies and stable fiscal and monetary policies contribute to its resilience against external shocks. In contrast, resource-dependent economies face challenges, with Southern Africa projected to experience a growth deceleration due to structural issues, particularly in the energy sector.
Countries like Nigeria and South Africa, traditionally heavyweight economies on the continent, are hindered by structural challenges impacting their growth potential. South Africa's energy sector struggles have weighed down on industrial production, while Nigeria's inability to capitalize on oil price surges and currency devaluations have impeded growth. Overcoming these challenges will be crucial for these countries to rebound and contribute to Africa's overall economic resurgence.
As Africa navigates through global headwinds, the emphasis on renewable energy, green growth, and private sector financing remains pivotal for sustainable economic development. By harnessing the continent's natural capital, implementing structural reforms, and attracting private investments, Africa continues to demonstrate resilience and potential in driving its economic agenda forward.
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