East Africa Set to Skyrocket as Continent’s Top Growing Region, AfDB Predicts

East Africa is poised to become the fastest-growing region on the African continent, according to the African Development Bank (AfDB).

The report states that the region’s economic expansion will surpass other regions this year and the next, as it regains its pre-pandemic momentum, Bloomberg reports.

According to the AfDB, the 13 nations in East Africa will experience an acceleration in growth, with a projected rate of 5.1% this year and 5.8% in 2024, up from 4.4% in the previous year. This growth is expected to be driven by increased public spending on infrastructure, governments’ efforts to diversify economies beyond agriculture, and deeper regional trade.

In particular, the report highlights the importance of investing in roads, railways, ports, and airports in East Africa. The improvement of transportation and connectivity, the reduction of trade costs, and increased access to markets are expected to boost economic activity in the region. These investments will pave the way for improved trade and commerce, attracting both domestic and international investors.

While East Africa is projected to lead the way in economic growth, other regions are also expected to experience positive but slower expansion. Central Africa is predicted to have the second-fastest pace of growth at 4.9% this year, followed by North Africa at 4.6% and West Africa at 3.9%. Meanwhile, Southern Africa is expected to be the region with the slowest growth rate at 1.6%.

However, it is important to note that there are risks and challenges that could hinder East Africa’s economic outlook. The ongoing conflict in Sudan, rising commodity prices, tightening of global financial conditions, and the impact of climate change are identified as key risks to the region’s growth.

The conflict in Sudan has the potential to disrupt regional stability and hinder economic progress. Rising commodity prices, such as oil and agricultural products, could pose challenges for East Africa’s economies that heavily rely on these sectors. Additionally, tightening global financial conditions could impact foreign investments and access to credit, affecting economic growth.

According to estimates from the African Development Bank (AfDB), inflation in the region, although still the highest in Africa, is projected to decrease to 21.8% this year from 28.9% in 2022, and could potentially decline further to 17.7% in 2024. The primary contributors to the high average rate are hyperinflation in Sudan and price increases in Ethiopia.

In terms of fiscal deficits, there is an expected narrowing trend with an average deficit of 3.7% this year and a further decrease to 3.1% in 2024. These improvements can be attributed partly to increased domestic revenue collection efforts.