By Adedapo Adesanya
The African Development Bank has said the West African region is projected to grow by 4 per cent in 2023 and 4.3 per cent in 2024, slightly lower than continental average growth rates of 4.1 per cent and 4.4 per cent, respectively.
In its 2023 West Africa Economic Outlook report released on Tuesday, the lender said West Africa experienced slower economic growth over the past year except for Cabo Verde, The Gambia, Guinea, Mali, and Niger.
In the outlook, the AfDB said the GDP growth outlook for the region is positive and that the three largest economies in the region, Nigeria, Ghana, and Côte d’Ivoire, are projected to account for over 82 per cent of the regional output.
The report assessed the economic performance of 15 West African countries, namely: Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.
In terms of country groupings, regional growth is expected to be driven by the non-resource-intensive economies (7.2 per cent) like Benin, Cabo Verde, Côte d’Ivoire, the Gambia, and Senegal, while other resource-intensive economies (4.8 per cent) and oil exporting countries (3.3 per cent).
The high growth performance in non-resource-intensive economies could be attributed to the diversified nature of the growth base (Côte d’Ivoire and Senegal) and good policy management in others.
The report notes that West Africa’s average gross domestic product decelerated to 3.8 per cent in 2022 from 4.4 per cent in 2021, implying that the growth recovery from the 2020 downturn had slowed.
The report attributes decelerating growth to, among other factors, such successive shocks as the resurgence of COVID-19 in China, a major trade partner for the region’s countries. Russia’s invasion of Ukraine has also spurred inflationary pressures on the cost of food, fuel, and fertiliser in many West African region countries.
The report further reveals that advanced economies have also tightened monetary policy, which has heightened aversion to risk globally and increased exchange rate pressures.
“Therefore, amid already high policy rates (e.g., policy rate of 18% in Nigeria, 29% in Ghana, and 19% in Sierra Leone), further rate hikes might do more harm than good to growth prospects,” it warned.
The report noted that adapting to climate change and the depletion of the region’s natural resources present an opening for businesses and governments to embrace sustainable and green growth.
“West Africa has enormous potential to achieve green growth, green industrialisation being the most obvious pathway. The rationale for green growth across the region is quite comprehensive: climate change impacts and risks, natural capital depletion, poverty, and food insecurity, as well as limited employment creation and many capital-intensive enclaves.”
Speaking on this, AfDB’s Chief Economist and Vice President for Economic Governance and Knowledge Management, Mr Kevin Urama, said multiple challenges had led to rising interest rates and were compounding debt service payments to African countries.
He explained that these included climate change, inflation driven by higher prices of energy, commodities, and disruption of supply chains, as well as the tightening of monetary policy in the United States and Europe.
Mr Urama added that greater effort would be needed in Africa to mobilise domestic resources and private sector financing to help countries achieve climate and green growth transitions.
“Africa is being short-changed [in] climate financing. The continent will need between $235 billion and $250 billion annually through 2030 to meet investments under its nationally determined contributions. Yet, Africa received only about $29.5 billion in climate financing between 2019 and 2020,” he said.
