The European Business Council for Africa

Employment in countries in the Middle East and North Africa (MENA) has grown one percent per year on average within private sector firms, which is much lower than the five percent average among other middle-income peers. In addition, the female labor force participation rate of 20% is the lowest in the world. And countries in the region also experience the high youth unemployment rate estimated at 26%.

Ensuring the private sector can gain access to markets and compete equally with government-run businesses is vital for countries across MENA to create the jobs needed to strengthen employment opportunities for all.

Climate change is already impacting Africa disproportionately, and will continue to do so, primarily by affecting the sectors that are key to the livelihoods of vulnerable communities, such as agriculture, forestry, and fisheries. Protecting natural areas and providing access to energy and quality infrastructure remain challenging in many countries on the continent, especially in Sub-Saharan Africa. The green growth approach is seen as a viable model for the delivery of climate-resilient and climate-compatible growth that ensures sustainable consumption and production patterns. As income and gender inequalities remain a significant barrier to achieving overall human development despite increases in average GDP per capita in many African countries, the green growth model is also pursued as a way to achieve inclusive growth by creating green and decent jobs; providing better basic services including access to energy, drinking water, and sanitation; closing the digital divide; improving air quality; and contributing to climate action simultaneously. Ensuring climate-compatible economic growth is especially crucial on a continent poised to become the growth frontier of the world; it currently hosts six of the top ten fastest-growing economies and its young and increasingly urban population will grow to 2.2 billion by 2030.

The European Commission has published their progress report on investing insustainable development. Relating to investments in Africa the report covers the recent EU-Africa Business Forum and how it highlighted the important role of private sector development and investment to promote jobs and growth in Africa. It also covers the Investment Climate Reform Facility and its support of public-private dialogue on investment climates in African countries. 

Financing the Sustainable Development Goals (SDGs) requires massive public and private investment to make them a reality for all people, everywhere. The COVID-19 pandemic has added to the urgency of tackling development challenges. This report on investing in sustainable development comes at a critical juncture, as resources are dwindling while needs are rising. The decline in financial resources for sustainable development is largely ascribable to COVID-19. GDP in developing countries in 2022 is projected to be about 7.5% lower, on average, than what was expected before the health crisis. Estimates provided by the International Monetary Fund in April 2021 (IMF, 2021) show that fiscal balances in low-income developing countries deteriorated by 1.6% of GDP between 2019 and 2020, growing from -3.9% to -5.6%. Resources generated by external flows also declined: foreign direct investment in developing countries fell by EUR 450 billion (-40%), developing countries’ merchandise exports to the European Union (EU) by almost EUR 100 billion, and remittances by close to EUR 10 billion (UN, 2021).

The UNCTAD report Economic Development in Africa Report 2021: Reaping the Potential Benefits of the African Continental Free Trade Area for Inclusive Growth aims to equip Governments in Africa and development partners with the knowledge of how the African Continental Free Trade Area can be beneficial for inclusive growth and how complementary policies are necessary to make the Free Trade Area inclusive across and within countries in Africa.

HIGHLIGHTS

  • Reforms have not produced sustained growth over the past decades due to political instability, weak governance that creates opportunities for elite capture, and mismanagement of natural resource wealth, says the latest Country Economic Memorandum published by the World Bank.
  • Consequently, CAR remains one of the world’s poorest and most fragile countries.
  • The report examines how CAR has managed at this point and provides recommendations to accelerate growth over the next decades.

Africa’s Pulse is a bi-annual publication of the Office of the Chief Economist in the World Bank Africa Region. It analyzes the short term economic prospects for the continent and current development challenges, as well as a special development topic.

The latest edition of Africa’s Pulse says growth recovery has slowed as the region faces new economic threats, including new COVID-19 (coronavirus) variants, global inflation, supply disruptions and climate shocks. These challenges are compounded by Russia’s invasion of Ukraine, which has led to increasing international prices on commodities, particularly food staples, fertilizers, oil and gas. As global inflationary pressures increase, African economies are also faced with the likelihood that advanced economies will withdraw the policy stimulus deployed at the start of the pandemic.

The International Monetary Fund (IMF) has published its new World Economic Outlook. WIth regards to Africa it covers the effect that soaring commodity prices are having on the continent, particularly as the region is highly sensitive to fluctuating food prices - Russia and Ukraine being the major global producers of wheat. 

The war in Ukraine has triggered a costly humanitarian crisis that demands a peaceful resolution. At the same time, economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest.

Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January.

Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term. War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January. Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential.

This report examines the potential macroeconomic and welfare impact of the Africa Energy Guarantee Facility (AEGF), including improved viability of energy projects and enhanced electricity access. The report also reviews three case studies of guarantee use for energy projects in the region, and outlines several major reasons why investors are less likely to adopt investment insurance as a financing instrument. In addition, the study reviews empirical literature on the impact of risk mitigation instruments on access to finance, aiming to determine how the AEGF will likely influence access to finance for energy investors in the region. This research has been performed under the EIB-GDN Programme in Applied Development Finance. Launched in 2017, the programme lasted for three cycles of twelve-months, during which talented researchers from ACP countries spent a year on a “deep dive” study of an IFE project, trained, guided and mentored by GDN, the EIB and expert advisors (EAs). The programme used academic research techniques to study the development impact of ongoing private-sector investments, built capacity for evaluative research in developing countries, and helped to boost the EIB’s accountability and development effectiveness.

Green hydrogen, sourced from water and renewable energy, has – by replacing fossil fuels – enormous potential for the reduction of global carbon emissions in hard-to-abate industrial sectors. Yet, like many early stage technologies past and present, a complex interplay of economic, regulatory, industrial and operational challenges still need to be overcome before hydrogen can play a large-scale role in the modern industrial economy. The shift towards hydrogen is expected to require investment in the hundreds of billions of euros over the coming decades and will require substantial amounts of private financing alongside public funding. In this report, the European Investment Bank's advisory services summarise the results of an investor consultation to get to the heart of these challenges, and offer recommendations for an accelerated development of the hydrogen sector.

Urbanisation is one the most profound transformations that the African continent will undergo in the 21st century. Since 1990, the number of cities in Africa has doubled in number - from 3 300 to 7 600 - their cumulative population has increased by 500 million people. Africa’s cities are the most rapidly growing cities in the world; they are the youngest and they are changing fast. Their impact on Africa’s economic, social and political landscape in the coming decades is likely to be profound. Urbanisation, therefore, presents immense opportunities to accelerate progress towards the 2030 and 2063 development agendas and for promoting continental integration in the context of the African Continental Free Trade Area (AfCFTA). For African policy makers, it also entails very important challenges in planning, managing and financing urban growth, both at the local and the national levels. In many places in Africa and beyond, there is a prevaling negative perception of the externalities of urbanisation and its impact on development. This has slowed policy processes to make urbanisation a central part of Africa's development strategies.