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What Does 2022 Hold for African Economies?

In 2021, African economies were hit by lockdowns, even though COVID infection rates were considerably lower than most parts of the Global North. 

That may not be the case in 2022. And meanwhile, climate is becoming an increasingly urgent issue for the continent, as John Asafu Adaye of the African Center for Economic Transformation explains.

John Asafu Adjaye: Africa is one of the regions that will suffer the most from climate change because it’s already a very hot place, even though African countries account for less than 4% of global emissions.

Climate Mitigation Win

There were mixed outcomes from COP26. On the positive side, there was a stronger ambition to reduce emissions, and that’s very important for Africa. The big win for Africa was the commitment by developed nations to provide finance to support climate mitigation. It was less than what we’re asking, but at least there’s now a commitment.

This funding will be based on plans that countries put forward in their Nationally Determined Contributions or NDCs. So for example, in the case of Ghana, which is my home country, Ghana will need roughly about 15 billion U.S. dollars between 2020 and 2030, of which about $8.5 billion will be for adaptation and the balance for mitigation.

BRINK: The next COP is going to be at the end of next year in the region in Egypt. Will that make a difference to the focus on Africa?

ASAFU ADJAYE: Yes. It’s going to make a big difference because Africa will be able again to put forward its urgent needs in terms of climate adaptation and mitigation. But of course, it’s a two-way street because Africa will also have to be prepared. It’s not just a matter of asking for money, but it should be backed by evidence to show that such and such an amount will be needed over a period of time.

BRINK: If we look at the impact that climate’s having already today in Africa, where would you say it’s being felt the most, or is it pretty evenly spread across the continent? 

ASAFU ADJAYE: In general, the parts of the Sahel stretching into East Africa are being very badly hit by climate already, in terms of reduced rainfall, increased temperatures and also irregular rainfall. Relatively speaking, countries in East Africa have done fairly well, but even there, we’ve had a high rainfall leading to floods, which have led to loss of lives and livelihoods in parts of Mozambique and parts of Kenya and so forth.

So in that sense, they’ve also been affected. And then in Southern Africa, there’s been an ongoing problem with droughts. So, those threats are not going to go away, and they’re only going to intensify in the coming years.

BRINK: Let’s turn to another kind of continental-wide problem: COVID. So far, only a fraction of the African population has been vaccinated. And yet, on the plus side, the mass outbreaks of the pandemic that scientists expected hasn’t happened. 

ASAFU ADJAYE: Even though infections have been relatively low compared to Western countries, I still don’t think we are out of the woods, and it’ll be very important to increase the number of vaccinations. As you said, it’s now about 8% that are fully vaccinated compared to about 60% in Europe, and the U.K. 

There’s been an improvement. First of all, I think the G7 have agreed that they need to increase the number of vaccines to the COVAX facility. And the U.S., for example, has increased donations of vaccines. But the amount that is required is far below what is on the ground, and some countries are actually talking about producing vaccines in the region. So, for example, Ghana has been selected as a possible site for manufacturing vaccines for the region. I think that’s the way to go.

The African Free Trade Agreement

BRINK: Another kind of continent-wide topic is the African Free Trade Agreement that was signed back in 2020 and has now been in place for a year. How is it going overall? 

ASAFU ADJAYE: It took off very slowly — to date, only 35 out of the 55 member countries have ratified the agreement. There is still excessive border bureaucracy that needs to be addressed. Even if you want to ship goods to Cote d’Ivoire or Togo just across the border from Ghana, there are so many procedures you’ve got to go through, and these need to be dealt with to permit the free flow of goods across borders. And of course, not to mention the infrastructure challenges — and I’m referring to road and rail connections, as well as air connections.

One big issue that needs to be addressed is cross-border digital payments. There is currently no common platform — they’re actually talking about one that would make payments very easy across borders. But these things should have been taken care of before implementation of the agreement. I’m expecting that these problems will be ironed out over the coming year.

BRINK: A lot of these problems come back to governance and the ability of governments to operate effectively and efficiently. Could you give us a tour of the state of political play in Africa? Where are your concerns and where are the bright spots for you?

ASAFU ADJAYE: So the concerns start with the Sahel region, where the threats from the Islamic state are still real, and places like Mali and places like Niger, and even in Guinea, where there’s an influx of these jihadis from the Islamic state. And in fact, even in Burkina Faso, there’ve been so many incidents this year of incursions by these fighters and loss of life and property and so forth. 

And then of course, when you move to places like Sudan and Ethiopia, you’ve got the ongoing civil unrest, especially in Ethiopia where the Tigray People’s Liberation Front is only about 200 miles from Addis Ababa and threatening to march into the capital. 

Unfortunately, Prime Minister Abiy Ahmed is also tough, rattling the sabers and asking Ethiopians to volunteer their services to defend the country. 

I know there’s been frantic peace talks going on from the U.S., from the African Union, but this sort of talk of going to war doesn’t actually help. 

BRINK: And then in Sudan, obviously another of Africa’s big countries, we saw recently the military saying that they were willing to hand power back to the civilian government. Do you think that will stick? 

ASAFU ADJAYE: That was also the result of the pressure from world leaders and from African leaders — they sort of caved in and have now decided to share power with the previous administration and restored the prime minister to his position. So I’m cautiously optimistic because they could have dug their heels in and refused to hand over power. I don’t think they’re ready for a complete transition, but it’s a positive development.

Unfortunately, in Guinea and Mali, we haven’t seen such developments, and the military are still entrenched and haven’t indicated whether they will stick to the timetable for handing power back to civilians. 

BRINK: What should we keep an eye on during the course of next year?

ASAFU ADJAYE: My main concern for next year is really COVID because as I said before, the numbers [of infected] are quite low, but it might not give a true reflection. And especially if we get a new variant like Omicron, which is more resistant or more virulent than the Delta variant that we have. If that overwhelms the health system, it could be very bad. So, that’s my main worry. 

I think the issue of security probably might not escalate and is likely to de-escalate, especially in West Africa with Mali, Guinea and Niger and hopefully in Ethiopia.

The average GDP growth was about 5% before COVID. And so, if the pandemic is held on the check, and of course, with the commodity prices increasing around the world, that should help Africa in terms of growth. But there is still a challenge with the disruption in supply chains, which is still affecting African countries, especially those that do a lot of business with China. 

As things become normal, that will help the growth, and for example, Ghana is projecting about 5%, 5.8% growth in 2022. But that very much depends on things getting back to normal in terms of global trade.

John Asafu-Adjaye

Senior Fellow at the African Center for Economic Transformation

John Asafu-Adjaye is senior fellow and head of research at African Center for Economic Transformation (ACET). Prior to that, he was associate professor of economics at the University of Queensland in Brisbane, Australia.

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