ABIDJAN — From COVID-19 to the war in Ukraine, external crises have weighed on African economies, but many on the continent see opportunities to enact sweeping reforms.
Africa has already shown some resilience during the pandemic, as its economic contraction has been less severe than the rest of the world, shrinking by 2% compared to 3.3% globally in 2020.
As Russia’s invasion of Ukraine weighs on the global economy, Africa is on the mend in 2022.
“Africa is heading for growth of around 3.7%, while there is a real risk of recession in North America and Europe,” said economist Lionel Zinsou, former Prime Minister of Benin.
“We have not been the greatest victims of the pandemic, and we will not be the greatest 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 business leaders surveyed in Africa, 78% say they are confident about their development prospects – up from 61% before the COVID crisis, according to a report by audit firm Deloitte.
‘OPPORTUNITY TO TRANSFORM’
However, the consequences of the war in Ukraine remain a threat as it has driven up the prices of wheat and other essential agricultural products and sparked fears of famine in some countries.
“We are concerned about the slowdown in global growth and the availability of certain products like wheat or fertilizers for Africa,” Ivorian President Alassane Ouattara said at the Africa CEO Forum in Abidjan this month.
Makhtar Diop, chief executive of the International Finance Corporation (IFC), an arm of the World Bank, said African economies had “taken a hit and failed to regain their pre-2019 growth rates”.
“The situation remains particularly difficult in view of inflation, which disproportionately affects 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 the lack of electricity supply and the cold chain,” said Zinsou, referring to the transport of goods that must be kept cold throughout the chain of supply.
These losses could be reduced through investments in infrastructure, 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.”
Some countries have picked up the pace in recent years. Ivory Coast has built new cashew processing factories 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 companies have wanted to be less dependent on foreign imports,” said Emmanuel Gadret, Deloitte’s head of French-speaking Africa.
Georges Wega, deputy director of international banking networks for the Africa region of the French financial group Societe Generale, believes that Africa has “a lot of potential” to finance its essential projects.
“Now is the time for Africa to achieve independence in many ways. We have to rely more on funds raised on the continent than on external debt,” he said.
The African Continental Free Trade Area (AfCFTA), which aims to harmonize tariffs across the continent, which is being done gradually, promises to boost intra-African trade.
“Africa has responded exceptionally (to the pandemic) financially and technically and will do so again,” Zinsou said.