The African Development Bank Group (AfDB) says in its 2023 West Africa Economic Outlook report that Nigeria, Ghana, Benin, Burkina Faso, and 11 other West African nations are projected to record a slight rise in Gross Domestic Product (GDP) of 0.1%, which equals to an average of 3.9% in 2023 relative to the 3.8% that was reached in 2022.
Why Nigeria, Other West Africa Countries’ GDP Growth Rate is Slow
Nigeria and other West African countries are experiencing a slowness in their Gross Domestic Product [GDP] growth rate largely due to the resurgence of COVID-19 in China, a major trade partner for the region’s countries and the tightened monetary policy of advanced economies that hitherto contribute grants to the region. The reports adds that Russia’s invasion of Ukraine had also spurred inflationary pressures on the cost of food, fuel and fertiliser in many West Africa region countries.
According to the report, while this growth marks an improvement from the COVID-19 affected years of 2020 and 2021, it has been slower than expected. It adds that the deceleration is attributable to various factors, including the resurgence of COVID-19 in China, a key trade partner for the region, and the ripple effects of the Russian invasion of Ukraine causing inflation in food, fuel, and fertilizers.
While the tightened monetary policy of advanced economies has also contributed to the economic slowdown, the report indicates a positive growth outlook for the region, forecasting a potential GDP increase to 4.2 percent in 2024. This optimism hinges on enhanced private sector investment in the green economy and sustainable energy.
Recognizing the urgency of addressing climate change and its detrimental effects on the region, the report underscores the need for a transition to a green economy. The rise in global heatwaves and worsening climate conditions necessitates a shift towards sustainable and environmentally friendly practices.
The AfDB urges West African countries to allocate more resources to the green sector, emphasizing that green industrialization could be a viable pathway to achieve these goals.
Professor Kevin C. Urama, African Development Bank Chief Economist and Vice President for Economic Governance and Knowledge Management, highlighted the challenges faced by African nations, including rising interest rates and escalating debt service payments.
He stressed the importance of mobilizing domestic resources and private sector financing to facilitate climate adaptation and green growth transitions. Urama emphasized that Africa needs substantial climate financing to meet its goals, as it has only received a fraction of the necessary funding thus far.
To address the issue of private sector climate financing, innovative instruments and mechanisms are proposed to attract private sector investment, thus promoting sustainable and resilient economic growth in the West African region.