The African Development Bank Group (AfDB) has projected that Africa’s economy will grow from 3.3% recorded last year to 3.9% in 2025 and rise to 4.0% in 2026, despite mounting geopolitical uncertainties and trade tensions globally.
The development finance institution, which made this forecast in its flagship ‘2025 African Economic Outlook’ report released on Tuesday, noted that despite the prevailing domestic and external challenges Africa continued to demonstrate notable resilience.
The report titled “Making Africa’s Capital Work Better for Africa’s Development” was released during the Bank Group’s 2025 Annual Meetings in Abidjan, Côte d’Ivoire, demonstrated the continent’s capacity to weather multiple shocks while identifying pathways to unlock a vast potential for transformation.
Despite the current global headwinds, the report’s findings reflected strong growth outlook for the continent’s economy with 21 African countries expected to achieve growth exceeding 5% in 2025, and four countries—Ethiopia, Niger, Rwanda, and Senegal—potentially reaching the critical 7% threshold required for poverty reduction and inclusive growth.
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The report also showed that Africa’s projected growth rates would surpass the global average and outpace most other regions except emerging and developing Asia, and that Africa’s continued resilience remained built on effective domestic reforms and improved macroeconomic management.
The continent’s Economic Outlook publication also indicated mixed growth performance across Africa’s regions. For example, it projected that East Africa would lead with a projected 5.9% growth in 2025-2026, driven by resilience in Ethiopia, Rwanda, and Tanzania while West Africa would maintain 4.3% growth, driven by new oil and gas production coming onstream in Senegal and Niger.
In addition, the AfDB reported that in the face of persistent headwinds, North Africa was expected to register 3.6% growth in 2025 while growth is projected in Central Africa to slow to 3.2% and Southern Africa would grow at only 2.2%, with its largest economy, South Africa, expected to achieve only 0.8% growth
The report indicated that significant challenges persisted as 15 countries are experiencing double-digit inflation, while interest payments now consume 27.5% of government revenue across Africa, up from 19% in 2019.
Commenting on the report’s findings, AfDB’s Chief Economist and Vice President, Prof. Kevin Urama, said: “Africa must now face the challenge and look inwards to mobilizing the resources needed to finance its own development in the years ahead.”
The bank’s AEO 2025 further estimated that with the right policies, Africa could mobilize an additional $1.43 trillion in domestic resources from tax and non-tax revenue sources through efficiency gains alone.
It identified Africa’s extraordinary but underutilized resource base as including natural capital with the continent hosting 30% of global mineral reserves and could capture over 10% of the projected $16 trillion in revenues from key green minerals by 2030 just as in human capital the continent’s median age of 19 represents a demographic dividend that could add $47 billion to Africa’s GDP through improved workforce participation
Similarly, in terms of financial capital, Africa’s Pension fund assets have grown to $1.1 trillion, while formal remittances could reach $500 billion by 2035 if transfer costs are reduced even full implementation of the African Continental Free Trade Area (AfCTA) could increase the continent’s exports by $560 billion and boost continental income by $450 billion by 2035
On urgent action needed to address resource leakages, AfDB stressed that massive capital outflows were undermining the continent’s development, noting that compared to $190.7 billion of financial inflows received in 2022, Africa lost approximately $587 billion from financial leakages. Of this, the report revealed that around $90 billion was lost to illicit financial flows, a further $275 billion siphoned away by multinational corporations shifting profits, and $148 billion lost to corruption.
Urama said: “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.
“There can be no substitute to sound macroeconomic policy management, quality institutions and good governance, and rule of law”, he added.
As expected, he harped on the vital need for leaders in the continent to bolster governance.
The report also calls for comprehensive reforms across several critical areas. On fiscal revenue mobilization, it recommends enhancing tax administration through digitalization, broadening national tax bases, and strengthening social contracts with citizens to improve compliance. It advocates making natural capital accounting mandatory and enforcing domestic value retention through beneficiation requirements.
The AEO also emphasizes the need to deepen financial markets by tapping institutional savings, developing local currency bond markets, and harmonizing regulatory frameworks to facilitate cross-border investment.
