Unleashing East Africa’s growth and tapping into the continent’s potential

Africa is on the cusp of a transformative era, with a burgeoning economy poised to reach a staggering USD 3 trillion GDP. At the heart of this growth is the dynamic East African region, which is rapidly emerging as a beacon of economic opportunity and development.

The future of Africa is bright, and East Africa is leading the way.

Populated by the world’s youngest demographic, Africa boasts the largest free trade area, recently punctuated by the African Continental Free Trade Area (AfCFTA). This has been ratified in 30 countries across the continent. Africa also has vast mineral deposits and natural resources, positioning it favourably for a dominant role in the global energy transition.

The East African economy has demonstrated remarkable resilience, buoyed by its diversification efforts, innovative spirit and collaborative mindset. This region has invested heavily in infrastructure development through public-private partnerships. Through the concerted infrastructure investment, a progressive move from traditional debt-led infrastructure projects to a joint approach that is cognisant of all parties. This is the best way to ensure development that best serves the people who benefit and use the infrastructure that is built.??

As the world seeks to transition to cleaner energy sources, East African countries have been using their rich natural endowments to harness renewable energy to?meet their growing energy demands sustainably. Kenya, Tanzania, Uganda and Rwanda have been at the forefront of developing?solar and wind power over the past decade. It is estimated that by 2050, clean energy could generate more than 26 million jobs in Africa.?

This transition, dependent on extractive industries, is marked through the growth of alternative energy solutions for electricity and the growing electronic vehicle market, which stands at $15.8 billion, and which is expected to grow to $21.4 billion by 2027, according to market research by Mordor Intelligence. As the continent has grown, so too has the complexity of the requirements for services. African start-ups reportedly raised about $1.5 billion during the Covid-19 pandemic in 2020, more than $4 billion in 2021, and an estimated $4.5 billion in 2022.?

Key highlights:

• Impressive growth: East Africa is projected to grow at a robust 5.1% in 2024 and 5.7% in 2025, outpacing global averages.
• Diversification and innovation: The region's focus on diversification, coupled with a spirit of innovation, has fostered remarkable resilience.
• Infrastructure investment: Public-Private Partnerships (PPPs) are driving significant infrastructure development,creating jobs and improving living standards.
• Renewable energy: East African countries are harnessing their natural resources to build a sustainable energy future, contributing to global climate goals.
• Global spotlight: Africa's growing influence is evident in its inclusion in the G20 and the establishment of the African Continental Free Trade Area (AfCFTA).

East Africa to lead continent in GDP growth into 2025

East Africa is projected to lead GDP growth on the continent, amidst global challenges, according to the African Development Bank Group’s African Economic Outlook 2024 report.

The region is expected to record the fastest growth with real GDP growth rising from an estimated 1.5 per cent in 2023, to 4.9 per cent in 2024, and 5.7 per cent in 2025.

However, the economic uncertainties in South Sudan and Sudan due to conflict have led to a downward revision of 0.2 percentage points for 2024, due to larger-than-expected contractions in the two states.

Seventeen African economies are projected to grow by more than five per cent in 2024, potentially increasing to 24 by 2025.

Other regions are also projected to see moderate to robust growth.

Central Africa's growth is expected to moderate from 4.3 per cent in 2023 to 4.1 per cent in 2024 before rising to 4.7 per cent in 2025.

West Africa's growth is forecast to increase from an estimated 3.6 per cent in 2023 to 4.2 per cent in 2024 and 4.4 per cent in 2025.

North Africa's growth is projected to decline slightly from 4.1 per cent in 2023 to 3.6 per cent in 2024 and then rise to 4.2 per cent in 2025. Southern Africa is expected to see slight growth increases from 1.6 per cent in 2023 to 2.2 per cent in 2024 and 2.7 per cent in 2025.

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Tewabech (Teba) H. Molla MSc.

Banking, Management Consulting, and Information Advisor