Africa’s development financing landscape is navigating a complex and turbulent global economic environment. While economic growth is projected to edge up from 3.3% in 2024 to 3.5% in 2025, many countries are grappling with high debt distress risks and inflation, with some African countries not yet experiencing the decline in inflation seen across the world. The European Investment Bank’s (EIB) financial conditions index for Africa shows a loosening of conditions after a severe tightening period from mid-2021 to mid-2023, but high yields remain a refinancing risk for some countries.
A major structural constraint remains the lack of access to finance, with private sector credit in Sub-Saharan Africa declining from 56% of GDP in 2007 to 36% in 2022, which has contributed to slower private sector development and industrialization. The IMF recommends that nations tackle urgent socioeconomic crises while building resilience to future shocks, highlighting the need for a balanced approach to fiscal management in turbulent waters. This complex picture shows that while there are signs of resilience, Africa’s development financing journey requires a strategic approach that addresses both immediate economic challenges and long-term structural constraints to build a more resilient and sustainable future.
