Through insights from business leaders, the 2024 edition of the Pan African Private Sector Trade and Investment Committee (PAFTRAC) report reveals a blend of cautious optimism and lingering concerns.
Each year, the PAFTRAC report on African trade provides a crucial overview of the continent's economic outlook. Despite persistent challenges—political instability, global conflicts, and economic pressures—African CEOs express remarkable optimism about the continent's future. According to the PAFTRAC survey, 67.36% of respondents are confident in Africa's economic prospects for 2024, marking a significant increase from previous years. Among them, 28.56% express high confidence, a sharp rise from 14% recorded in 2022 and 2023. Conversely, only 6.91% report low confidence, highlighting the resilience of Africa’s private sector.
This positive outlook is supported by encouraging signs such as the potential stabilization of inflation and interest rates and growth prospects in key sectors like technology, agriculture, and renewable energy. The report also emphasizes the promising impact of the gradual implementation of the African Continental Free Trade Area (AfCFTA), which is driving initiatives in digital trade and agriculture.
However, the general optimism masks significant regional disparities. While countries like Rwanda, Côte d’Ivoire, Senegal, and Ethiopia are expected to achieve growth rates exceeding 6%, others, such as Sudan, South Africa, and Equatorial Guinea, may face low or negative growth in 2024.
According to the International Monetary Fund (IMF), Africa's overall growth is projected to reach 3.8% in 2024, up from 3.4% in 2023. This gradual recovery remains below the 5% annual growth rates seen before 2019, prior to the COVID-19 pandemic’s disruption of African economies.
The impact of this recovery also varies across sectors. While some countries, like Benin, Senegal, and Côte d’Ivoire, have successfully raised funds on international markets through eurobond issuances, others continue to struggle to stabilize their economies.
Inflation, Debt, and Interest Rates
Despite the encouraging signs, economic challenges remain significant. The PAFTRAC report identifies three major obstacles: surging inflation, high public debt levels, and rising interest rates. In 2024, 67.61% of surveyed CEOs consider inflation a major barrier to growth, followed by 62.03% citing growing debt, and 54.12% expressing concern over rising interest rates.
These concerns are reflected in alarming figures: Africa’s average debt-to-GDP ratio has doubled in a decade, reaching 68.6% in 2023, according to Afreximbank. Ten countries, including Egypt, South Africa, and Nigeria, account for 67% of the continent's external debt, exacerbating financial pressures.
Inflation has reached critical levels in several African economies, notably Sudan (157.9%), Egypt (35.8%), and Nigeria (31.6%). In response to this monetary erosion, bold initiatives have emerged, such as Zimbabwe’s launch of a gold-backed currency, the ZiG, in April 2024.
Simultaneously, interest rate hikes by 20 African central banks since January 2024 reflect efforts to contain inflation, though this strategy further increases borrowing costs for governments and businesses.
To address these challenges, PAFTRAC and African Development Bank (AfDB) experts stress the importance of structural reforms. The AfDB’s 2024 report calls for improved governance, greater transparency in resource management, and strengthened investments in digitalization and social protection. These measures aim to lay the foundation for sustainable and inclusive growth.
