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Africa to Overtake Asia as the Economically Fastest Growing Region

Africa is poised to become the fastest-growing region in the world, surpassing Asia, according to a new report by the Mo Ibrahim Foundation. The report reveals that 6 of the 10 fastest-growing economies in 2023 are African countries. While Africa’s trading has shifted mainly towards the Middle East and Asia, the raw materials export model has remained the same. Since 2000, the EU’s share of Africa’s export market has dropped by a quarter, while China’s share has increased five-fold. Asia now represents almost 42% of Africa’s exports and over 45% of its imports, above Europe in both cases. The report highlights that the future looks bright for Africa; however, the report stresses that the current global financial system does not meet Africa’s needs.

Africa is therefore moving toward more self-resilience (see above). An example of this move away from US dominance of financial markets, African members of the OPEC are working with the African Export-Import Bank (Afreximbank) to launch an energy bank by the year’s end.

Also, many debt-distressed African countries will have successfully restructured their most unaffordable loans and be better placed to attract a new wave of sustainability capital through private investment by 2024, says a new report from special intelligence advisory Pangea Risk. The report argues that debt transparency, sound fiscal and monetary governance, and candid bilateral relations with creditors are the primary political indicators of effective debt treatments, while multilateral debt relief initiatives, such as the G-20’s Common Framework, fail African countries. Angola is cited as an example of the model for African countries charting a way out of debt, while Zambia and Mozambique provide “worst case” examples. The authors predict that Ghana, Kenya, and Nigeria will successfully restructure their debt in 2023 in order to avoid a default scenario by 2024. Kenya and Ghana are predicted to achieve successful debt restructurings through extended maturities on foreign currency obligations, domestic loan swaps in exchange for concessional finance, and limited haircuts for some bondholders.

Alastair Tempest

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