The International Monetary Fund (IMF), has stated that foreign trade and commodity prices will be the main drivers for African development in 2022. The internationally-renowned firm predicts that overall, the continent’s economy would increase by 3.8% in 2022. This is good news, as the various disruptions caused by the Covid-19 pandemic has slowed GDP growth, causing a per capita income decline of 5.5%.
According to the IMF, more than 25 of Africa’s fastest-growing economies would grow by more than 5% by 2022. The report, titled “Recovery during a pandemic”, states that Seychelles will grow 7.7% in 2022, Rwanda will grow 7%, Mauritius will grow 6.7%, Niger will grow 6.6%, Benin, Cabo Verde, South Sudan and Côte d’Ivoire will each grow 6.5% respectively, while Guinea and Ghana will grow 6.3% and 6.2% respectively.
In 2022, Kenya and Gambia will both grow by 6%. Except for Rwanda and Niger, which are expected to expand at 8% and 10% respectively in 2023, projections imply that these top performing nations will achieve steady and consistent growth. Senegal, whose growth is expected to reach 5.5% in 2022, is predicted to be the second African country to reach double-digit growth in 2023, with a rate of 10.8%, the IMF report further predicts.
Streamlining the industrialisation of East Africa
The Pan-African Payment and Settlement System (PAPSS) became active in September 2021, according to the African Export-Import Bank and the African Continental Free Trade Area (AfCFTA) Secretariat. PAPSS provides fast cross-border payments in local currencies between African markets, achieving a novel financial market infrastructure aim in the process.
“The benefits of PAPSS for cross-border payments include cost reduction; reduction in duration and time variability; decreasing liquidity requirements of commercial banks; decreasing liquidity requirements of central banks for settlement as well as its own payments; and strengthening the Central Banks’ oversight of cross border payment systems,” the official PAPSS website reads.
PAPSS offers up a market of 1.2 billion people with a combined GDP of US$3 trillion. This is massive, and if it is done correctly, Africa might finally become a global economic powerhouse without relying on the extractives business.
Africa will save more than $5 billion per year in payment transaction expenses once the PAPSS is fully implemented.
The East African Community (EAC) is focusing on industrialisation and beneficial growth in East Africa. This comes after evidence indicating that the epidemic wreaked havoc on a variety of businesses, including finance, tourism, and hospitality.
According to UNECA data, the pandemic’s economic impact on Eastern Africa has been mixed. The UN agency goes on to say that nations with strongly dependant economies on tourism have been particularly badly hurt. Increasing industrial capacity in East Africa from an average of 6% and supporting increased intra-regional trade are among the attempts to get the area back on track.
The EAC is expanding its One-Stop Border Posts (OSBPs) across the regions, as well as establishing standard gauge railroads and adding Tanzania and Burundi to the EAC One Network Area, in order to boost commerce.