Economy
Africa Faces Energy and Aid Pressures Despite 4.1% Growth Outlook
Capital Ethiopia · 4 hours ago · Read the Full Story on Capital Ethiopia
AI SUMMARY
A new UN report projects Africa's economy to grow by 4.1 percent in 2026, but warns that energy import dependence, shrinking aid, and high borrowing costs threaten to limit these gains.
- Africa’s economy is projected to grow by 4.1 per cent in 2026, easing from an estimated 4.4 per cent in 2025 before recovering slightly to 4.2 per cent in 2027.
- African economies remain highly exposed to imported energy costs, worsened by Middle East conflict disruptions affecting oil and gas markets.
- Net imports of mineral fuels and related products equaled 25.1 per cent of GDP in Cabo Verde, 16.1 per cent in Mauritania, 15.7 per cent in Liberia, 9.5 per cent in Djibouti, and 9.2 per cent in Mauritius in 2023 trade data.
- Official development assistance is projected to fall by almost seven per cent globally in 2026, marking a third consecutive annual decline.
- Volatility in non-resident portfolio flows doubled in 2026, putting additional pressure on frontier markets with limited financial buffers.
- Developed economies capture approximately 70 per cent of global greenfield investment in strategic sectors like semiconductors, AI infrastructure, and energy-transition technologies.
- Full implementation of the African Continental Free Trade Area could raise regional income by seven per cent and lift 30 million people out of extreme poverty by 2035, according to a 2020 World Bank study cited in the report.
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