Despite the significant challenges it faces, Africa is expected to achieve the world's second-highest growth rate in 2023-24, underscoring the robustness of its economies. While the macroeconomic fundamentals in Africa display a diverse range of dynamics, substantial hurdles still persist.According to the African Development Bank (Af DB), growth above the global average of 3.4% is expected this year and the outlook, despite the numerous challenges, is stable.In its latest economic outlook, the bank found that sustained tightening of global financial conditions had put pressure on African national currencies and debt vulnerabilities had been worsened by the rapid exchange rate depreciation and high primary deficits that exist. Tighter global financial conditions have also increased debt service costs.The bank says there are some key risks to watch. These include subdued global growth, the physical risk of climate change, commodity dependence and price volatility, as well as high interest rates and debt service costs.The green agenda has continued to take a more prominent role on the continent and this is set to increase.The Af DB believes poverty reduction and climate and economic resilience are imperative and advises countries to invest in green strategies. “Green growth positively correlates with real GDP growth,” reads the report. “Countries with better green growth outcomes also do well on other economic and climate resilience indicators.”Furthermore, pursuing green growth objectives yields immense economic benefits. “Africa is the frontier market in green growth opportunities,” said a spokesman for the Af DB. “It has a market size at $2.97 trillion, significant natural resource endowments and the necessary human capital.”To date the private sector has shown little appetite for Africa’s climate actions and green growth. A variety of reasons exist for this, including weak regulatory structures and institutions, the lack of investment-ready project pipelines and limited access to international markets.Investment, however, is set to increase, especially in light of the global move towards sustainability. The continent has the potential to significantly move up the battery and electric vehicle value chain, for example.According to the Af DB, it is critical that countries in Africa invest in project preparation on a national and regional scale while also developing long-term strategies and implementation roadmaps outlining opportunity and investment in green growth.Policy development as well as regulatory clarity are just as critical. “The private sector’s contribution to green growth is vital. An estimated $57.6 billion in climate finance is needed to achieve the objectives set for 2030.”
