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The United Nations (UN) is optimistic that Africa’s economic growth will accelerate in 2025, with regional Gross Domestic Product (GDP) expected to expand to 3.7% from an estimated 3.4% in 2024. This growth will be driven by economic recovery in Nigeria, South Africa, and Egypt.
According to a recent report by the UN, the continent’s positive outlook will extend to 2026 with a regional GDP growth projection of 4.0%.
Nigeria’s economic pressures, arising from major policy reforms in energy subsidies and foreign exchange management, are expected to ease as the economy nears the end of a challenging transition phase, with consumer prices and exchange rates beginning to stabilise.
Between 2023 and 2024, Nigeria’s central bank implemented a series of policy changes to bolster the value of the naira, encourage foreign capital inflows, and tame the country’s raging inflation. Among these policies was the decision to prohibit the use of dollar-dominated collaterals for naira loans, the re-introduction of the “willing-buyer, willing-seller” model and the successive increase of lending rates in 2024.
However, the impacts of these well-intended efforts on the nation’s economy have yet to be seen. As of December 2024, the country’s inflation rate rose to 34.8%, while the naira fell to ₦1,535 per dollar on the last day of the year.
The report added that in South Africa, electricity supply constraints stabilised in 2024, and as such, “economic growth is finally projected to recover to pre-pandemic levels. ”
It further stated that the road to Egypt’s economic recovery will be paved by increased revenue generation. In the first half of 2024, Egypt saw improvements in its balance of payments supported by funding from the International Monetary Fund (IMF) and the investment agreement with the Abu Dhabi Development Holding Company.
Meanwhile, East Africa is projected to see faster growth than other regions in the continent. The UN anticipates that sustained domestic demand and a robust recovery in international tourism will drive moderately high GDP growth in Ethiopia, Kenya, Rwanda, Uganda, and the United Republic of Tanzania.
Conversely, the growth prospects of Central African countries like Chad, Equatorial Guinea, Gabon and the Central African Republic are less promising amid stagnating crude oil production and weak economic recovery.
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Furthermore, the UN has raised concerns about the rapidly growing debt-servicing burden in some of Africa’s largest economies, highlighting its adverse impact on capital expenditure.
“In several of the region’s largest and most populous economies, including Angola, Egypt, Ghana, Nigeria, and Uganda, interest payments have exceeded total expenditures on education and health in recent years, highlighting the severe trade-offs governments face,” the report read.
In light of this, the international organisation recommends a “carefully calibrated approach” to fiscal consolidation which will include efficient public spending, improved subsidy programmes, and progressive tax policies.
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