Africa in 2023: Can the Continent Outrun Global Headwinds?


Some of Africa’s major economies will suffer from the ongoing impacts of the Russia-Ukraine war and food price inflation, but experts say that Senegal and Kenya offer cause for optimism.

With Africa facing the impacts of the Russia-Ukraine War, runaway food price inflation and the tailwinds of Covid-19, 2022 was a year of enormous economic disruption – and economists and bankers tell African Business that its negative impacts are likely to spill over into 2023.

As the new year kicks off, Africa is likely to experience a contraction of its annual GDP growth as rising inflation and interest rates hikes continue to bite, restricting borrowing and government spending, says Charlie Robertson, chief economist at Renaissance Capital.

“It’s going to be a year of austerity for many lower-income countries, not just Africa. They can’t borrow easily from abroad. It’s too expensive. We’ve got a global slowdown, which won’t help exports. And that’s a tough combination. Governments will have to take measures like removing the fuel subsidy or at least reducing it in the second half of 2023, which is likely to hurt the middle classes.”

But whether African economies wilt further under the barrage of external shocks or make tentative steps towards recovery is likely to differ widely among individual countries. In particular, the continent’s oil exporters could be buoyed by robust energy prices which currently sit at $75 a barrel – at least for the time being, says Miguel Azevedo, head of investment banking, Middle East and Africa (exc. SA) at Citigroup.

“On one hand, for energy producer countries, 2023 appears as a good year considering the current spike in prices, while 2024 will be less profitable. For industrial commodities producers, however, it is the other way around: 2023 will probably be a little bit under pressure, and in 2024, as the world economy grows, things will improve.”

Published on: African Business

Publication Date: 04/01/23