Economic Outlook 2025: Africa’s Path to Recovery Despite Challenges

In a changing global economy marked by rising protectionism, increasing geopolitical tensions, and fragmented financial flows, Africa is moving against the trend. This is the key message from the latest report by Afreximbank, Africa Trade and Economic Outlook 2025, presented in Abuja during the bank’s annual meetings. The report highlights a continent that remains fragile but is determined to recover and deepen regional integration.

Economic Growth Returns

Africa’s economy is showing signs of revival. In 2024, the continent’s gross domestic product (GDP) grew by 3.3%, a modest but positive result amid global shocks.

The outlook for 2025 is even better, with growth expected to reach 4%. This surpasses the global average and is close to the growth rates seen in emerging economies.

Nearly 41% of African countries are projected to grow faster than 5% in 2025, almost twice the worldwide average.

This momentum is driven by strong domestic consumption, a rebound in investment, and steady global demand for African exports, especially raw materials.

Inflation Easing

Inflation in Africa, which hit 19.3% in 2024, is expected to decline to 14.8% in 2025. This decrease is linked to tighter monetary policies, national efforts to stabilize prices, and improvements in supply chains.

Debt Management Improves

Public finances are also showing signs of stabilization. In 2024, Africa’s public debt stood at 67.2% of GDP but is forecast to decrease to 65% in 2025.

While still high, this downward trend reflects better debt management and stronger economic growth.

Trade Rebounds

Trade within Africa is recovering. In 2024, African trade rose by 13.9%, reaching $1.5 trillion. Intra-African trade, which grew by 12.4% to $220.3 billion after a nearly 6% decline the previous year, is gaining momentum.

However, it still accounts for only 14.4% of total formal trade—far below the continent’s potential.

The growth of continental trade largely depends on the implementation of the African Continental Free Trade Area (AfCFTA).

Although progress has been made, challenges such as bureaucratic delays, non-tariff barriers, poor infrastructure, and limited access to trade financing remain. Africa faces an estimated trade finance gap of $100 to $120 billion annually.

To address this, Afreximbank invested $18.7 billion in 2024, aiming for $40 billion by 2026. Other regional institutions are working to follow suit but face hurdles from international banking regulations and credit rating biases.

Financial Innovation and Regional Payments

A notable development is the Pan-African Payment and Settlement System (PAPSS), a cross-border payment platform in 15 countries that uses local currencies.

Connected to central banks, PAPSS reduces reliance on the US dollar, cuts transaction costs, and boosts intra-African trade.

Africa is also exploring digital currencies issued by central banks, like Nigeria’s eNaira and Ghana’s eCedi, reflecting a push for innovative monetary solutions.

Additionally, mobile money usage is high, with 33% of adults using it—far above the global average of 10%.

A Resilient and Ambitious Continent

The report paints a picture of Africa as a continent in motion, facing significant risks but driven by a strong will to act.

It emphasizes that Africa can no longer depend on external forces and must accelerate regional integration, strengthen economic sovereignty, invest in infrastructure, and modernize its financial systems.

Afreximbank advocates for “institutionalizing resilience” through coordinated policies, digital tools, and regional platforms. In a multipolar and uncertain world, Africa is committed to forging its own path on its own terms.

Source: l’Express