Aminat Gusanu
The African Development Bank (AfDB) has highlighted that in 2023, West Africa experienced a deceleration in economic growth, except for specific countries, including Cape Verde, The Gambia, Guinea, Mali, and Niger.
This insight was shared through AfDB’s recently published “2023 West Africa Economic Outlook” report, released in Abuja on Wednesday.
The report was titled “Mobilising Private Sector Financing for Climate and Green Growth in West Africa.”
According to the bank, the report assessed the economic performance of 15 West African countries.
These countries include Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.
“The report provides key economic trends in 2022, as well as medium-term (2023-2024) economic forecasts for the region. It also evaluates strategies to accelerate the mobilization of private sector financing for climate and green growth in West Africa,” it said.
As per the report, West Africa’s average Gross Domestic Product (GDP) decelerated to 3.8 percent in 2022 from 4.4 percent in 2021.
The implication, it stated, was that the growth recovery from the 2020 downturn had slowed.
The decelerating growth was attributed to successive shocks, such as the resurgence of COVID-19 in China, a major trade partner for the region’s countries.
It also mentioned that Russia’s invasion of Ukraine had spurred inflationary pressures on the cost of food, fuel, and fertilizer in many West African countries.
The report further revealed that advanced economies had tightened monetary policy, heightening aversion to risk globally and increasing exchange rate pressures.
According to the report, the region’s GDP growth outlook is positive, projected to pick up slightly, reaching 3.9 percent in 2023 and 4.2 percent in 2024.
However, it stated that the transition to green growth would require more significant resources.
The report indicated that adapting to climate change and the depletion of the region’s natural resources presented an opportunity for businesses and governments to embrace sustainable and green growth.
West Africa, the report said, has enormous potential to achieve green growth, with green industrialization being the most obvious pathway.
It explained that the rationale for green growth across the region was comprehensive, including climate change impacts and risks, natural capital depletion, poverty, food insecurity, limited employment creation, and many capital-intensive enclaves.
AfDB’s Chief Economist, Prof. Kevin Urama, stated that multiple challenges had led to rising interest rates, compounding debt service payments to African countries.
Urama mentioned that these challenges included climate change, inflation driven by higher prices of energy and commodities, supply chain disruptions, and the tightening of monetary policy in the United States and Europe.
He noted that more effort would be required in Africa to mobilize domestic resources and private sector financing to help countries achieve climate and green growth transitions.
He emphasized, “Africa is not receiving adequate climate financing. The continent will need between 235 and 250 billion dollars annually through 2030 to meet its nationally determined contributions.
“Yet, Africa received only about 29.5 billion dollars in climate financing between 2019 and 2020. Private sector financing to support climate adaptation and mitigation in Africa is estimated at just 4.2 billion dollars from 2019-2020, the lowest of any region in the world.
“Africa’s private-sector climate financing gap is estimated to reach 213.4 billion dollars annually between 2020 and 2030,” the report said.
Urama, also the AfDB’s Vice President for Economic Governance and Knowledge Management, said Africa could accelerate green development transitions by optimizing its natural capital, estimated at about 6.2 trillion dollars in 2018.
He mentioned that the continent, however, was not utilizing its natural resources optimally due to poor valuation, degradation, illicit capital flows, and losses from royalties and taxes.
Meanwhile, AfDB’s lead economist, Guy-Blaise Nkamleu, stated that Guinea-Bissau, Mali, Liberia, and Niger were ranked among the ten most vulnerable countries to climate change and environmental hazards worldwide.
He therefore advised that “to boost private sector financing for climate change and green growth, West African governments need to deploy innovative instruments and mechanisms to attract private sector financing.”
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