Africa’s economy is poised to accelerate from a projected 3.3% growth in 2024 to 3.9% in 2025, reaching 4% in 2026, despite growing geopolitical tensions and global trade disruptions, according to the African Development Bank Group's 2025 African Economic Outlook report. 

The continent’s continued growth, in the face of both domestic and global challenges, reflects Africa’s growing economic resilience. The report highlights 21 African countries expected to post growth exceeding 5% in 2025. Ethiopia, Niger, Rwanda, and Senegal are projected to surpass 7% growth, the benchmark often cited as necessary for substantial poverty reduction and inclusive development. Africa’s overall economic performance is forecast to outpace the global average and trail only emerging and developing Asia.

The Bank attributes this resilience to ongoing domestic reforms and improvements in macroeconomic management. However, growth will be uneven across regions. East Africa leads with a projected 5.9% growth rate for 2025-2026, bolstered by strong performances in Ethiopia, Rwanda, and Tanzania. West Africa is forecast to expand by 4.3%, driven in part by new oil and gas production in Senegal and Niger. North Africa is expected to grow at 3.6%, while Central Africa’s growth will slow to 3.2%. Southern Africa lags behind, with a projected growth rate of only 2.2%, as South Africa, the region’s largest economy, is forecast to grow by just 0.8%.

Despite these positive projections, the report warns of significant macroeconomic challenges. Fifteen African countries face double-digit inflation, and interest payments now consume 27.5% of government revenues—up sharply from 19% in 2019.

“Africa must now face the challenge and look inwards to mobilizing the resources needed to finance its own development in the years ahead,” said Prof. Kevin Chika Urama, Chief Economist and Vice President of the African Development Bank Group, during the report presentation.

The report identifies enormous potential for Africa to raise domestic capital through better resource utilization. It estimates that up to $1.43 trillion could be mobilized through increased efficiency in tax and non-tax revenue collection. Africa’s natural capital is particularly underleveraged; the continent holds 30% of the world’s mineral reserves and stands to capture over 10% of an estimated $16 trillion in revenues from green minerals by 2030.

Africa’s youthful population, with a median age of 19, also represents a demographic advantage. With improved labor participation, the continent could add $47 billion to its GDP. On the financial front, pension fund assets have reached $1.1 trillion, and formal remittances could rise to $500 billion by 2035 if transfer costs are lowered. Meanwhile, the full implementation of the African Continental Free Trade Area could lift exports by $560 billion and increase income by $450 billion by 2035.

However, the report notes that Africa’s development is being undermined by vast capital outflows. In 2022, while Africa received $190.7 billion in financial inflows, it lost nearly $587 billion due to financial leakages. These include $90 billion in illicit financial flows, $275 billion lost through profit-shifting by multinational corporations, and $148 billion lost to corruption.

“When Africa allocates its own capital (human, natural, fiscal, business and financial) effectively, global capital will follow Africa’s capital to accelerate investments in productive sectors in Africa,” said Vice President Urama.

The report outlines key policy actions to address these issues. It underscores the importance of sound macroeconomic management, institutional quality, good governance, and the rule of law. Urama stated, “There can be no substitute to sound macroeconomic policy management, quality institutions and good governance, and rule of law.”

The report calls for reforms to enhance fiscal revenue through better tax administration, broader tax bases, and improved social contracts to boost compliance. It also advocates for mandatory natural capital accounting and policies to retain value domestically through beneficiation.

Finally, the Bank urges the development of deeper financial markets by mobilizing institutional savings, expanding local currency bond markets, and harmonizing regulatory frameworks to facilitate cross-border investments.