Sub-Saharan Africa’s poised for economic growth – WEO Report

By Christabel Oboshie ANNAN, Accra

THE latest World Economic Outlook (WEO) report, has revealed that Sub-Saharan Africa is poised for improved economic growth in 2025 despite ongoing global challenges.

The World Economic Outlook (WEO) is an IMF report that reviews and forecasts global economic conditions in both the short and medium term.

It examines the economic outlook for advanced, emerging, and developing economies, while also addressing pressing global issues.

Speaking on the report’s findings, Zed News’s Economic Contributor, Emmanuel Boateng, noted that the growth in Sub-Saharan Africa is largely attributed to high commodity prices, increased agricultural productivity, and sustained investment in infrastructure.

Reforms

These factors, he said, are helping to bolster economies across the region, with countries like Nigeria and South Africa undertaking reforms to address their structural challenges.

“The growth we are seeing is driven by rising commodity prices, which benefit resource-rich nations, coupled with advancements in agricultural productivity and ongoing infrastructure projects,” he stated.

He highlighted these elements as critical to sustaining the region’s economic momentum.

However, he cautioned that long-term growth hinges on economic diversification to reduce vulnerability.

“African economies must move beyond dependency on advanced economies and focus on diversifying their economic bases. Over-reliance on external markets and conditions increases their susceptibility to global shocks,” he added.

Dependence on Commodities

Emmanuel Boateng pointed to global financial conditions and geopolitical stability as key influences on the region’s ability to maintain its upward trajectory.

“While internal reforms and investments are crucial, external stability plays a significant role in sustaining the progress we are witnessing,” he added.

He further noted that the heavy reliance of Sub-Saharan African economies on commodity exports poses a significant challenge to the region’s economic stability.

Emanuel Boateng explained how fluctuations in global commodity prices directly affect government revenues, trade balances, and currency stability, leaving African economies vulnerable to external shocks.

“Reliance on commodities creates volatility in government revenue,” Mr. Boateng noted.

He elaborated that this dependence on primary commodities like gold, oil, cocoa, coffee, and cashew means that any drop in global demand or prices directly impacts earnings.

Consequently, many African nations experience fiscal instability when commodity markets decline, further straining their economic resilience.

In addition to revenue fluctuations, he highlighted the impact of commodity dependence on currency stability.

Strength of Currency

“The strength of the currency in many African countries is driven by the prices or earnings from these commodities, which are traded in U.S. dollars,” he explained.

When global demand rises, countries benefit from increased foreign reserves, strengthening their currencies. Conversely, when demand falls, currencies weaken, exacerbating economic challenges.

To address this vulnerability, the Economic Contributor noted the urgent need for African nations to diversify their economies.

“Growth should not be wholly driven by reliance on commodity earnings,” he said.

Instead, he advocated for a long-term approach focused on developing manufacturing industries and improving agricultural processing to add value to exports.

Diversification

Highlighting agriculture as a critical area for diversification, he underscored the need to shift from exporting raw produce to processed goods.

He pointed to the cocoa industry as an example, where Ghana and Côte d’Ivoire produce over half of the world’s cocoa yet earn less than 10% of the value chain.

“Exporting cocoa beans and importing chocolate is not sustainable, we need to move into agro-processing and value addition to reap the full benefits of our resources.”  he stressed. “

Emmanuel Boateng called for a shift in Africa’s economic strategy, adding that we must move away from being known for agrarian efforts alone and embrace robust value addition. This according to him will create a more resilient and sustainable growth model for the continent.