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Zawya
28-05-2025
- Business
- Zawya
African Economic Outlook 2025—Africa's short-term outlook resilient despite global economic and political headwinds
Africa's economy is projected to increase from 3.3 percent growth in 2024 to 3.9 percent in 2025, reaching 4 percent in 2026, despite mounting geopolitical uncertainties and trade tensions, the African Development Bank Group ( said Tuesday in its flagship 2025 African Economic Outlook report. Despite the prevailing domestic and external challenges Africa continues to demonstrate notable resilience. The report, titled 'Making Africa's Capital Work Better for Africa's Development,' was released during the Bank Group's 2025 Annual Meetings, taking place in Abidjan, Côte d'Ivoire. It demonstrates the continent's capacity to weather multiple shocks while identifying pathways to unlock a vast potential for transformation. Strong growth outlook despite global headwinds The report presents encouraging projections despite significant challenges: 21 African countries will achieve growth exceeding 5 percent in 2025, with four countries—Ethiopia, Niger, Rwanda, and Senegal—potentially reaching the critical 7 percent threshold required for poverty reduction and inclusive growth. Africa's projected growth rates will surpass the global average and outpace most other regions except emerging and developing Asia. Africa's continued resilience is built on effective domestic reforms and improved macroeconomic management. Mixed growth performance across Africa's regions Growth prospects vary significantly across regions: East Africa leads with a projected 5.9 percent growth in 2025-2026, driven by resilience in Ethiopia, Rwanda, and Tanzania. West Africa maintains solid 4.3 percent growth, driven by new oil and gas production coming onstream in Senegal and Niger. In the face of persistent headwinds, North Africa is expected to register 3.6 percent growth in 2025. In Central Africa, growth is projected to slow to 3.2% and Southern Africa will grow at only 2.2 percent, with its largest economy, South Africa, expected to achieve only 0.8 percent growth Significant challenges persist. Fifteen countries are experiencing double-digit inflation, while interest payments now consume 27.5 percent of government revenue across Africa, up from 19 percent in 2019. 'Africa must now face the challenge and look inwards to mobilizing the resources needed to finance its own development in the years ahead,' said Prof. Kevin Chika Urama, Chief Economist and Vice President of the African Development Bank Group, presenting the report's findings. Massive domestic resource potential remains untapped The AEO 2025 estimates that, with the right policies, Africa could mobilize an additional $1.43 trillion in domestic resources from tax and non-tax revenue sources through efficiency gains alone. Africa's extraordinary but underutilized resource base includes: Natural capital: Africa hosts 30 percent of global mineral reserves and could capture over 10 percent of the projected $16 trillion in revenues from key green minerals by 2030 Human capital: The continent's median age of 19 represents a demographic dividend that could add $47 billion to Africa's GDP through improved workforce participation Financial capital: Pension fund assets have grown to $1.1 trillion, while formal remittances could reach $500 billion by 2035 if transfer costs are reduced Business capita l: Full implementation of the African Continental Free Trade Area could increase exports by $560 billion and boost continental income by $450 billion by 2035 Urgent action needed to address resource leakages The report stresses that massive capital outflows are undermining the continent's development. Compared to $190.7 billion of financial inflows received in 2022, Africa lost approximately $587 billion from financial leakages. Of this, around $90 billion was lost to illicit financial flows, a further $275 billion siphoned away by multinational corporations shifting profits, and $148 billion lost to corruption. Vice President Urama said: "When Africa allocates its own capital (human, natural, fiscal, business and financial) effectively, global capital will follow Africa's capital to accelerate investments in productive sectors in Africa." Key policy recommendations "There can be no substitute to sound macroeconomic policy management, quality institutions and good governance, and rule of law." VP Urama said, emphasizing the vital need to bolster governance. The report also calls for comprehensive reforms across several critical areas. On fiscal revenue mobilization, it recommends enhancing tax administration through digitalization, broadening national tax bases, and strengthening social contracts with citizens to improve compliance. It advocates making natural capital accounting mandatory and enforcing domestic value retention through beneficiation requirements. The AEO also emphasizes the need to deepen financial markets by tapping institutional savings, developing local currency bond markets, and harmonizing regulatory frameworks to facilitate cross-border investment. The African Economic Outlook: The 2025 African Economic Outlook provides a comprehensive roadmap for unlocking Africa's transformation potential through better mobilization and utilization of domestic capital resources. Distributed by APO Group on behalf of African Development Bank Group (AfDB). Media Contact: Olufemi Terry Communication and External Relations Department Email: media@ About the African Development Bank Group: The African Development Bank Group is Africa's premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 41 African countries with an external office in Japan, the Bank contributes to the economic development and the social progress of its 54 regional member states. For more information:
New York Times
17-05-2025
- Business
- New York Times
U.A.E. Is Pouring Money Into Africa, Seeking Resources and Power
Look at the chief economic and strategic spots across Africa — ports for key trade corridors, mines that produce critical minerals, large renewable energy projects — and you will find the United Arab Emirates. As the United States and, to a lesser extent, China reduce their investment, aid and presence on the African continent, the Emirates is using its enormous wealth and influence to fill the void. Persian Gulf investments in Africa, primarily by the Emirates, have exploded in recent years. Since 2019, $110 billion worth of deals — mostly by firms tightly aligned with the ruling powers — have been announced, dwarfing amounts pledged by any other country. 'The U.A.E. is turning into a dominant foreign player' in much of Africa, said Anna Jacobs, a nonresident fellow at the Arab Gulf States Institute in Washington. Its efforts to become a world leader, particularly in finance and technology, are likely to be bolstered under President Trump, Ms. Jacobs said. The president, seeking to draw Emirati money to the United States, paved the way this week for the sale of American advanced artificial intelligence chips to the Emirates. The Emirates' wide-ranging investments and efforts to become a world leader in A.I. are part of an ambitious plan to increase the country's influence, particularly over global supply chains. Like other oil-producing nations in the Persian Gulf, the Emirates is looking to diversify its economy away from fossil fuels, and it sees Africa as an essential part of the plan. The continent has vast mineral resources, a growing population, agricultural potential and a strategically important location bordering the Red and Mediterranean Seas as well as the Indian and Atlantic Oceans. Powerhouse Emirati corporations based in Dubai and Abu Dhabi with political connections are in dozens of countries across Africa. AMEA Power is already building or operating clean energy plants in Burkina Faso, Djibouti, Egypt, Ethiopia, Ivory Coast, Kenya, Morocco, South Africa, Togo, Tunisia and Uganda and has plans to expand. Abu Dhabi National Energy Company has projects in Morocco, Senegal and South Africa and is participating in a project to invest $10 billion in renewable energy in sub-Saharan Africa. DP World, the gargantuan government-backed ports and logistics operator, has invested billions of dollars in ports and economic free zones from Algeria to Zambia, including in the Berbera port city in the breakaway republic of Somaliland, where the Emirates also has a military base. Last summer it announced that it would spend another $3 billion on African ports over the next three to five years. Last year, the Emirati International Holding Company invested more than $1 billion for a 51 percent share in the Mopani Copper Mines in Zambia. Spending in Egypt has also soared. Last year, the Emirates agreed to invest $35 billion to develop a new city and tourism destination on Egypt's Mediterranean coast. Emirati investment in Africa has ramped up as China's has tapered off. Once the biggest foreign investor on the continent through its Belt and Road Initiative, China still has a large presence, but Beijing has pulled back in recent years after a series of debt crises in Africa and economic problems at home. In 2022 and 2023, the Emirates announced a total of $97 billion in investments in Africa — three times China's total, according to fDi Markets, a database of foreign investments. U.S. investment in 2023 was about $10 billion. Experts said that even though not all of these pledges would pan out, they showed an overall commitment to doing business on the continent. The Emirates is also looking to build trade and has signed bilateral economic partnership pacts with three African nations, including Kenya, since the year's start. 'The U.A.E.'s total foreign assistance in Africa, which exceeded $1 billion in 2023-24, also highlights our ongoing commitment to addressing urgent needs,' a government spokesperson on trade and aid said. Meanwhile, Mr. Trump has fast-tracked America's exit from Africa, ending billions of dollars in funding, dismantling the U.S. Agency for International Development and ending all contributions to the African Development Bank. The State Department's reorganization plan also calls for the elimination of most operations in the region. Britain has also tightened its flow of money into the continent in recent years as it has increased aid to Ukraine and increased its own military spending. The Trump administration's actions are extreme, said Ricardo Soares de Oliveira, a co-director of a program on African governance at Oxford University, but they reflect a larger global trend away from development aid and liberal values. The world is transitioning to an era in which the focus on democracy and free markets is becoming less significant, Mr. Soares de Oliveira said. 'A more business-focused approach is going to be the shared norm,' he added. That isn't to say the Emirates does not have substantial strategic and political interests in Africa. What's different is that it has delegated statecraft to private interests and businesses, almost all of which have ties in some way to the government or ruling families, said Andreas Krieg, a fellow at the Institute of Middle Eastern Studies at King's College London. These enterprises are expected to generate both economic and strategic returns. 'The U.A.E. has revolutionized statecraft for a small country,' Mr. Krieg said. It has fewer than one million citizens, is smaller than the state of Indiana and has a relatively tiny military. Yet, he said, 'it's very much playing the game of a middle power.' Some of the Emirates' political choices have stirred concerns. Sudan's government has accused the Emirates of fueling genocide with its backing of the Rapid Support Forces, the paramilitary group engaged in a civil war that has killed 150,000 and displaced 14 million people. Recently, Sudan's military cut diplomatic ties with the Emirates, which has said it has provided only humanitarian assistance. The Emirates has also been accused of funneling money to the Russian mercenary group Wagner in both Sudan and Libya. 'There is no such thing as clean or dirty money in the U.A.E.,' Mr. Krieg said. Ken Opalo, an associate lecturer at Georgetown University's School of Foreign Service, said the Emirates aimed to be the world's gateway to Africa for investment and trade, whether legal or smuggled. The gold trade alone that passes mostly through Dubai is worth $30 billion, he said. 'The U.A.E. has developed a robust regulatory framework that ensures that the trade in gold is conducted with the maximum security, integrity and transparency,' an Emirati official said. As Mr. Trump's visit to the gulf region this week illustrates, Washington considers the Emirates a reliable ally in the region and in Africa. The two countries have maintained close security ties. But Washington may underestimate just how valuable the commercial partnership between the Emirates and China is. Ambitious investments in green energy in Africa rely on Chinese technology, minerals and goods. 'The U.A.E. ultimately militarily relies on the U.S., but it also wants to position itself as the Switzerland of the gulf where everyone is welcome,' Mr. Opalo said. 'They want to be a renewables hub, and it's hard to play that game without engaging China.'
