The Brookings Institution has forecasted a 4.2% growth in Africa’s GDP for 2025, an improvement from 2023’s 3.1%, per the African Development Bank. The increase is attributed to economic reforms, notably in Nigeria, alongside significant infrastructure investments. This recovery marks a rebound from challenges like inflation, limited financing, and COVID-19’s lingering effects. Rapid urbanization and Africa’s youthful population are further bolstering strong domestic demand.
The report highlights the transformative potential of the African Continental Free Trade Area, poised to enhance regional integration and intra-African trade. However, challenges such as external debt, which rose to 67% of GDP by 2022, and costly debt servicing remain significant risks. Additionally, political instability and extreme weather events threaten economic stability, affecting agricultural productivity and food security.
Brookings also notes Africa’s technological revolution, with rising internet penetration, fintech, and thriving startup ecosystems in Nigeria, Kenya, and South Africa. Services now dominate Africa’s economy, contributing 56% to output over the last decade. Despite opportunities, external shocks and high borrowing costs could limit growth. Projections from Moody’s and the World Bank align with Brookings, forecasting similar growth rates supported by reforms, foreign investments, and improved financial conditions.