Maintaining Positive Momentum
It’s that time of the year again when we find ourselves reflecting on the year that was and the year ahead. On the African continent, many countries are still recovering from the aftershocks of the COVID-19 pandemic and are doing so amid a fraught geopolitical environment. These tensions have, to some extent, created hurdles in the path of Africa’s recovery.
The African Development Bank has attributed the economic slowdown on the continent to astronomical inflation caused by soaring food and energy prices. These issues have been aggravated by the current geopolitical chaos and climate change. Nevertheless, the continent is projected to grow at a steady rate of 4.3 percent in 2025. This means that Africa will retain its position as the fastest-growing region after Asia. This is driven by several positive factors.
Great potential
The continent’s youth demographic will spur enormous growth. Africa is the continent with the world’s youngest population, with more than 60 percent of the population under 25. This means that the continent has an extremely productive population that only needs to be leveraged to reap rewards.
In the new year, the continent will seek to move away from viewing its young population in terms of mouths to feed, bodies to keep healthy, and jobseekers looking for employment. On the contrary, Africa will aim to make use of this young, vibrant, and highly entrepreneurial population to buttress its march towards modernisation by engaging them in development and realising their full potential in line with the African Union’s Agenda 2063.
Through fruitful partnerships, the continent has been reducing reliance on agriculture as a source of growth. In many economies, the number of people engaged in agriculture has been decreasing in favour of services and industry. Technological innovations, value addition to local primary products, and industrialisation have been slowly replacing agriculture in many countries. Uganda, for example, is expected to witness continuous growth driven by the exploration of oil and gas.
In fact, the East African Crude Oil Pipeline project alone is anticipated to generate over $20 billion over the next 25 years for the two partnering East African countries of Uganda and Tanzania. This growth will also trigger demand for specific skills and technology, likely further driving growth and general economic income in 2025 and beyond.
Africa has also been strengthening cooperation with partners, particularly China, in green innovation. With more than 1.3 billion people, Africa has the potential to make a significant contribution to the overall climate action effort. Additionally, as a continent that is home to many of the world’s developing countries, Africa also stands to suffer significantly from the adversity of climate change.
In line with these partnerships, the continent has been said to be on the right trajectory to avoid the “pollute first, clean up later” path to modernisation. A number of projects, like the Garissa Solar Power Plant project in Kenya and the De Aar Wind Farm project in South Africa, are already operating successfully. Therefore, a growing consciousness of the threat of climate change will likely see further movement towards green growth in the new year.
In addition, the internal politics of the continent will have a significant impact on what happens and how the year unfolds in 2025. In the new year, 12 African countries, including Tanzania, Malawi, Egypt, Cameroon and Burundi, will hold general elections (another 17 in 2026). Some countries on this list have performed so well in posting growth over the past few years that they are expected to maintain their growth momentum in the new year. However, some commentators say that growth may suffer due to electoral politics and populist policies as incumbent governments try to win over voters. While this could negatively impact economic performance, it does, in some instances, produce positive results where this scrambling leads to decisive investment in key economic sectors. Overall, all this will play into what happens in these and other countries over the coming 12 months.
Tasks ahead
So, does this mean the continent’s economic growth will have smooth sailing? No, it does not mean there will be no challenges in the new year. For starters, the climate crisis has been a key factor causing a slowdown in economic performance over the past few years, leading to high food prices. It has held back growth in most economies in Africa, and the trend may continue. There’s no doubt that climate change has a bearing on agriculture. Therefore, even when Africa is projected to post positive growth figures in 2025, countries will need to implement fiscal measures aimed at stabilising their economies. This, together with the adoption of new technology in the agricultural value chain, will ensure growth.
The application of technology can fuel growth in agricultural employment and production. Indeed, the new technologies can spark further innovations targeting sustainable agriculture. With more people taking up new agricultural technologies and methods, the continent can expect to see more output from its farms. This is regardless of whether the change will be driven by South-South cooperation in Uganda, the happiness herb (Juncao grass) in Rwanda, or irrigation and rice farming in Burkina Faso. Through agricultural partnerships, the continent is already striding towards food security and sustainable agriculture.
Meanwhile, the economies that are heavily dependent on volatile agricultural commodities like coffee - for example, Uganda, Ethiopia, and Burundi - might be hit by climate shocks unless they can diversify production. Here, we might see occasional slowdowns, which can only be mitigated through diversification.
In short, despite the positive outlook, Africa will still need to diversify production and leverage the goldmine of its young population to achieve the projected growth. The continent must also reorient itself to capitalise on opportunities already available. A case in point is the African Continental Free Trade Area and the Belt and Road Initiative. These are two opportunities with the potential to expand market access for the continent’s products. In addition, with programmes like China’s measures to support industrialisation, agricultural modernisation, and talent development, along with zero-tariff treatment for products from many African countries, the continent should be well-positioned to achieve its projected growth rate in the new year.
The author is Research Fellow of Development Watch Centre, Uganda
