From Covid-19 to the war in Ukraine, external crises have squeezed African economies, but many on the continent see opportunities for radical reform.
Africa was already showing some resilience during the pandemic, as its economic contraction was less severe than the rest of the world, shrinking by 2 percent, compared with 3.3 percent globally in 2020.
While the Russian invasion of Ukraine weighs on the global economy, Africa is looking brighter again in 2022.
“Africa is heading for growth of around 3.7 percent, while there is a real risk of recession in North America and Europe,” said economist Lionel Zinsou, former Benin prime minister.
“We were not the biggest victims of the pandemic, and we will not be the biggest victims of the collateral effects of the war in Ukraine,” Zinsou added.
The conflict in Europe has fueled a surge in global inflation, but Zinsou said rising commodity prices are offsetting higher import costs in Africa.
Another positive sign is that investor confidence in Africa is at higher levels than before the pandemic.
Of 190 African entrepreneurs surveyed, 78 percent said they were confident about their development prospects – compared to 61 percent before the Covid crisis, according to a report by auditing firm Deloitte.
– ‘Possibility for transformation’ –
However, the aftermath of the war in Ukraine remains a threat as it has pushed up prices for wheat and other essential agricultural commodities and sparked fears of hunger in some countries.
“We are concerned about the slowdown in global growth and the availability of certain products such as wheat or fertilizers for Africa,” Ivory Coast President Alassane Ouattara said during the Africa CEOs Forum in Abidjan this month.
Makhtar Diop, director general of the International Finance Corporation (IFC), a branch of the World Bank, said African economies had “taken a hit and failed to recover their pre-2019 growth rates”.
“The situation remains particularly difficult given inflation, which is disproportionately affecting the poorest sections of the population,” he added.
However, some see the situation as an opportunity for African countries to develop new strategies.
“We lose a large part of our harvest every year due to lack of electricity supply and cold chain,” said Zinsou, referring to the transport of goods that need to be kept cold throughout the supply chain.
Those losses could be reduced through infrastructure investments, he added.
For Diop, “every crisis is an opportunity to structurally change the situation. By increasing value creation on the continent, there is potential for economic transformation in African countries.”
– ‘gain independence’ –
Some countries have increased the pace in recent years. Ivory Coast has built new cashew processing plants while Nigeria is building a major oil refinery in Lagos.
In Guinea, foreign companies have recently been contracted to build bauxite processing plants.
“One of the consequences of the pandemic is that many corporations wanted to be less dependent on foreign imports,” said Emmanuel Gadret, head of Deloitte in francophone Africa.
Georges Wega, deputy director for international banking networks for the Africa region at French financial group Societe Generale, believes Africa has “a lot of potential” to fund its essential projects.
“This is the time for Africa to gain independence in many ways. We must rely more on funds raised on the continent than on foreign debt,” he said.
The African Continental Free Trade Area (AfCFTA), which aims to harmonize tariffs across the continent, which is happening gradually, promises to boost intra-African trade.
“Africa has responded exceptionally (to the pandemic) financially and technically and will do so again,” Zinsou said.
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