Africa’s economic future is looking bright, as its growth is projected to accelerate from 3.3 per cent in 2024 to 3.9 per cent in 2025 and 4 per cent in 2026, according to the latest African Economic Outlook report by the African Development Bank Group (AfDB).
Despite geopolitical tensions, trade disruptions, and persistent global uncertainties, the continent continues to show remarkable resilience, driven by domestic reforms and improved macroeconomic management.
While the global economy faces headwinds, Africa is poised to outperform many regions, trailing only emerging and developing Asia in growth rates. Almost half of African nations (21) are expected to achieve growth above 5 per cent in 2025, with Ethiopia, Niger, Rwanda, and Senegal potentially hitting the crucial 7 per cent mark needed to significantly reduce poverty.
According to the report, East Africa will lead the charge with a projected 5.9 per cent expansion in 2025–26, fuelled by strong performances in Ethiopia, Rwanda, and Tanzania. West Africa follows closely at 4.3 per cent, thanks to new oil and gas production in Senegal and Niger.
However, growth remains uneven, with Central and Southern Africa lagging at 3.2 per cent and 2.2 per cent respectively, as South Africa struggles with a meagre 0.8 per cent growth forecast.
Despite promising figures in many areas, challenges persist. Inflation remains stubbornly high in fifteen countries, while rising debt burdens consume over a quarter of government revenues, up from 19 per cent in 2019. These pressures highlight the urgent need for Africa to look inward and mobilise its own resources to fund development.
As Prof. Kevin Chika Urama, Chief Economist of the African Development Bank Group, stated during the launch of the report, the continent must unlock its vast but underutilised wealth to drive transformation. “Africa must now face the challenge and look inwards to mobilising the resources needed to finance its own development in the years ahead,” he said.
With efficient policies, an additional Sh185.09 trillion ($1.43 trillion) could be mobilised through improved tax systems and non-tax revenues alone. The continent holds 30 per cent of the world’s mineral reserves, positioning it to capitalise on the booming green energy sector, which could generate over Sh2.07 quadrillion ($16 trillion) by 2030.
Africa’s youthful population, with a median age of 19, represents a demographic goldmine, capable of adding Sh6.08 trillion ($47 billion) to GDP through increased workforce participation. Meanwhile, pension funds have swelled to Sh142.18 trillion ($1.1 trillion), and remittances could reach Sh64.72 trillion ($500 billion) by 2035 if transfer costs are reduced.
The African Continental Free Trade Area (AfCFTA) also offers a game-changing opportunity, with the potential to boost exports by Sh72.48 trillion ($560 billion) and raise continental income by Sh58.16 trillion ($450 billion) within a decade.
However, these opportunities are undermined by massive financial leaks. In 2022 alone, Africa lost an estimated Sh75.87 trillion ($587 billion)—over three times the Sh24.65 trillion ($190.7 billion) it received in inflows. Illicit financial flows drained Sh11.65 trillion ($90 billion), while corporate profit-shifting siphoned off Sh35.59 trillion ($275 billion), and corruption cost another Sh19.16 trillion ($148 billion).
These losses highlight the critical need for stronger governance, transparency, and policy reforms. As Prof. Urama noted, only when Africa allocates its own capital—human, natural, fiscal, business, and financial—effectively, will global capital follow to accelerate investments in productive sectors on the continent.
The report underscores the need to address these gaps through enhanced tax administration using digital tools, broadening of tax bases, and fostering trust between governments and citizens. Natural resource management must be overhauled, with mandatory accounting and value-added processing to retain more wealth domestically.
Financial markets also need deepening, with pension funds and local bond markets playing a greater role in funding development. Above all, the report stresses that good governance, strong institutions, and the rule of law are non-negotiable for sustainable growth. With the right policies, Africa can turn its vast resources into lasting prosperity.
