Sub-Saharan Africa (SSA) is an incredibly diverse region that includes countries with low, lower-middle, upper-middle, and high-income classifications. It is home to 22 fragile or conflict-affected nations and 13 small states, which are characterized by small populations, limited human capital, and restricted land areas.
The continent is rich in natural resources, has the world’s largest free trade area, and a market of 1.2 billion people. This offers a unique opportunity for the region to create a new development path by harnessing its resources and the potential of its people.
According to the latest economic update for the region, growth in Sub-Saharan Africa is expected to reach 3% in 2024, up from 2.4% in 2023, and to accelerate to 4% in 2025 and 2026. However, rising conflict and violence are holding back economic activity, and climate shocks are likely to worsen this instability. Approximately 464 million people in the region are still living in extreme poverty in 2024. Additionally, the region faces significant debt distress risks, with 53% of countries eligible for International Development Association (IDA) assistance at high risk or already in debt distress.
Economic growth is uneven across the continent. In East Africa, growth is set to rise from 1.7% in 2023 to 2.2% in 2024, while West Africa is expected to increase from 3.3% in 2023 to 3.9% in 2024. Overall, SSA’s economic performance is constrained by the lower-than-average growth of its largest countries.
In South Africa, energy and transportation challenges continue to hinder economic activities. In Nigeria, modest growth can be traced back to issues within its oil sector. Furthermore, conflicts and military coups in countries like Sudan, Niger, and Gabon are likely to impede growth in the Economic and Monetary Community of Central Africa and several Sahel nations.
Exploiting the potential of natural resources presents an opportunity to enhance fiscal stability and debt sustainability for African countries. Resources such as oil, gas, and minerals offer significant economic prospects for SSA economies during the low-carbon transition.
The contributions of the International Development Association (IDA), amounting to $75 billion under IDA19, have been and continue to be an essential support for countries in the region facing increasing debt and diminishing fiscal resources. This highly concessional financing is driving development and transforming the lives of individuals, communities, and businesses in AFE. IDA has significantly influenced outcomes in various areas including health, food security, energy, climate resilience, digital connectivity, and water and sanitation. Moreover, it plays a crucial role in mitigating crises arising from locust invasions, droughts, and political instability due to conflicts.