Despite the setbacks of the Russian-Ukraine war and an ongoing climate crisis, Africa has remained resilient, recording an economic growth of 3.8% in 2022 – projected to rise to 4.1% in 2023-2024 – exceeding the global average of 2.9% and the European average of 1.1%.
‘The time to invest in Africa is now.’
This is the message that Prof Kevin Urama, Chief Economist and vice president of the African Development Bank Group, put across to Asian markets as he presented them the 2023 edition of its flagship African Economic Outlook report.
During a joint session between the African Development Bank and Korea Institute for International Economic Policy (KIEP) in Sejong-Si, Korea, the professor called on Asian countries to abandon the unfavorable depictions that are placed on Africa and seize the opportunity to partner with the continent to be among the first to reap the rewards from its potential.
“I invite investors and governments in Asia to see Africa not as a distant land but a continent full of opportunities,” said Prof Urama during the session.
Despite facing the recent pandemic and the Russian-Ukraine war, Africa has remained resilient. According to the 2023 African Economic Report, after facing a climate crisis, Africa recorded economic growth of 3.8% in 2022 and is to rise to 4.1% in 2023-2024, exceeding the global average of 2.9% and the European average of 1.1%. However, Asia is still estimated to be higher at 4.3% in 2023-2024.
Africa has great potential to combat climate change by investing heavily in clean energy. The continent can pursue green growth to accelerate its economic growth. As a result of being home to some of the world’s fastest-growing economies, having a young growing population, and holding an abundance of raw materials, Africa has all the potential to increase investment in green infrastructure and technology.
“Africa must play a key role in the green transition, given that it is home to 60% of the world’s unexploited arable land and the minerals needed for green growth. These resources could stimulate sustainable development and investments. This is virgin land, which can be easily used to build low-carbon infrastructure without large-scale expenditure,” said Prof Urama.
However, with all these factors in play, progress towards green growth has been slow. This is why investment from Asia would be crucial. According to Edmond Wega, the Bank Group’s Executive Director for Canada, China, South Korea, Kuwait and Turkey, Asian investors must look beyond unfavourable depictions of Africa to seize investment opportunities in Africa.
“Asia needs to use its technologies and knowledge to build a win-win relationship with Africa and work with its regions, countries and the African Development Bank to achieve a convergence and turn dreams into a reality,” he said.
There is a need for assistance from the international community to help Africa reach its potential in green growth. In doing so, Africa will not only accelerate its growth but will be a valuable partner to the international community. Sung-Chun Jung, vice president of KIEP, also highlighted Africa’s vast potential for green growth, considering its fast-growing population and abundant renewable energy and natural resources.
“The international community must provide strong support for the efforts by African countries to combat climate change, particularly through funding, technology transfers and capacity building. The private sector must also play a significant role in covering the funding gap to tackle climate change,” he said.
This comes at a time that a majority from Africa are joining the bandwagon of de-dollarization. Many African economies have suffered due to the dependence on the US currency and thus, they are looking forward to promote greater economic sovereignty by reducing or eliminating dependence on the US dollar in a country’s economy, a shift that President William Ruto has been championing since he took power.
With a large number of private Chinese investors are already present in Africa, and the bilateral development banks also having a role to play, given the numerous innovative opportunities that exist for engaging with more private investors.
Asia is already ahead of the West when it comes to mutual partnership with an African continent that wants to reduce dependence. Nonetheless, efforts must be made on both sides to ensure Asia benefits from the partnership and Africa not only accelerates its green growth and economic growth but also it doesn’t find itself in another situation of total dependency.
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