African economies are resilient, this is what emerges from the analyzes of experts from the French Development Agency (AFD) who are publishing their analyzes and forecasts for 2023 at the start of the year. But there are still many challenges to be met.
Covid-19 pandemic, war in Ukraine, soaring food prices, the wallets of Africans have not been spared over the past three years. Fortunately, 2023 is looking promising, as Thomas Melonio, Executive Director of Innovation, Strategy and Research at AFD, thinks.
« In 2023, per capita income in Africa will return to and even exceed the level of 2019. We are finally emerging from the consequences of the Covid crisis, even if there are still health aspects, so that is a reason for hope “, explained Thomas Melonio. ” But there are challenges. For example, financing conditions are more difficult at the moment for African countries. However, the continent is returning to a positive trend and absorbing the Covid-19 shock and the consequences of the war in Ukraine. »
The big question concerns the supply of fertilizers, especially for countries that live on cash crops such as cotton.
We are already seeing the beginning of a drop in fertilizer prices, but not yet a return to the situation that was that of 2019-2022. We are going to have a normalization, but as it is late, we must not minimize the impact of the cost of fertilizers on productions which use a lot of it. I notice all the same that for food crops produced in Africa, there is less use of fertilizers. Perhaps African food producers will therefore be able to provide the African population with sufficient food. Does it still have to be well distributed and at decent prices? But on the side of food production volumes, concerns are more moderate than on cash crops.
A picture clouded by growing indebtedness and rising interest rates
One of the challenges for African countries will be to find the necessary funding to keep their economies running. The rise in interest rates and growing indebtedness darken the picture. In this regard, AFD analysts advise States to increase tax revenue by working more with the informal sector.
« Before taxing the informal sector, solutions must be offered to it, in particular social protection. And put in place taxes that will benefit them without affecting them themselves “, explain Hélène Djoufelkit, Director of the Economic Diagnosis and Public Policy Department at AFD. « And once they have these protections, we can tax them gradually, and assure them that once formalized, they will be able to fit into global value chains, like a kind of quota reserved for SMEs for procurement tenders. »
The financing of African economies and recovery will be at the center of an international meeting, initiated by France, next June.