Source: The Conversation – Africa
The current global economic situation is confusing. On the one hand it’s characterised by inflation, and food and other critical supply shortages caused by the wars in Ukraine and the Gulf states. On the other, by optimism and economic growth caused by the boom in AI investments.
The situation both poses threats and offers opportunities to Africa.
On the upside, the International Monetary Fund and the World Bank are predicting that African growth will be around 4.5% in 2026 and 2027. This is higher than the IMF’s estimates of 3.1% global growth in 2026 and 3.4% in 2027.
The IMF maintains that African countries are reaping the rewards of the painful macro-economic reforms that they undertook earlier in the century. The reforms are helping African governments weather the shocks caused by the wars in Ukraine and the Gulf.
But the World Bank has warned that 2027 African poverty levels will be higher than they were in 2022. UN Trade and Development (UNCTAD) reports that since 2010, the continent’s public debt has increased at about four times the rate at which its GDP has grown.
On top of this, the capacity of African governments to reduce poverty is declining. African governments spend an average 12% of government revenue servicing their debts. According to UNCTAD, this exceeds the amounts many African governments are spending on health or education. Furthermore, the director of the IMF’s Africa department has warned that African countries are likely to face increased food insecurity and rising inflation because of the combined effects of rising fertilizer prices and El Niño.
Evidence is also mounting that African countries will not be able to raise the US$4.1 trillion they will need by 2030 to meet their SDG goals and climate needs. Since 2010, African countries’ average external debt as a percentage of exports has doubled and is now equal to 140% of exports. The proportion of the debt owed to private creditors has increased substantially and is now about 45% of sub-Saharan Africa’s total debt. Moreover, Africa is often charged more for this financing than comparable countries in other regions.
This is happening at the same time as official development assistance – historically an important source of funding for Africa’s development projects and programmes – declined 24% in 2025 from the 2024 level and is expected to decline even further in 2026 and 2027. It is now at the 2015 level in real terms.
The legacy multilateral development banks like the World Bank and the African Development Bank are becoming an increasingly important source of finance for African countries. In fact, the World Bank is the single largest creditor to sub-Saharan Africa.
These institutions claim that they are working to increase the amount of financing they can provide. For example, the World Bank announced that its collaborations with the private sector leveraged US$35 billion in 2023 and US$112 billion in 2025. Funding for low-income countries is not growing as dramatically. In fact, the growth in World Bank financing to developing countries has only increased by about 1% per annum in real terms since 2000.
I have been working on international development finance and African development for over 30 years. It is clear to me that Africa is facing the most unpredictable and risky and the least friendly environment that it has faced in decades. However, Africans cannot afford to simply resign themselves to being hostages of fortune. Instead, they should take advantage of some of the opportunities that are being created by this confusing environment.
Here are six ways in which countries can do this.
The gaps
First, the continent needs to use its own internal resources more effectively.
Studies suggest that African pension funds, insurance companies and sovereign wealth funds hold a total of US$4 trillion in assets. But only a small proportion of these funds is invested in the continent. Efforts are being made to change this. For example, the recently established African Credit Rating Agency can play a role in promoting investments in African companies and in promoting the development of national and regional capital markets on the continent.
Read more:
Africa’s new credit agency: why it’s needed
African governments can support this development by implementing their agreement to establish an African Financial Stability Mechanism. This mechanism would provide support to countries that experience financial crises. They can also take actions to reduce the loopholes that foreign and local investors can exploit to avoid paying taxes.
Second, African governments can make more effective use of the regional multilateral financial institutions that they have established. These entities, like the Afrexim Bank, the African Finance Corporation and the Trade and Development Bank, understand the African context well. They can be important partners for African development, particularly supporting economic and financial integration across the continent.
However, they do not always act as development banks. For example, AfreximBank sued South Sudan in English courts for the US$657 million that it was owed under its loan agreement. Other entities fought with Ghana and Zambia over their contributions to those countries’ debt restructurings. Their member states should provide clearer guidance on how these institutions can promote sustainable development and regional integration in Africa.
Third, the continent can establish an African chapter of the recently created borrowers’ platform. This initiative is designed to improve the bargaining position of sovereign borrowers in the global south. It can be a useful forum for sharing information, peer learning and capacity development relating to more effective government debt management. It can also help borrowers identify how to diversify the sources from whom and the currencies in which they borrow.
Fourth, African states can continue advocating for international tax reform. They have played a leading role in promoting and negotiating the UN tax treaty. This treaty, which is expected to be adopted and opened for signature in 2027, should help African countries raise their fair share of tax resources from foreign actors in their economies.
Fifth, there is the question of reparations for the crime of slavery. African countries like Ghana and states in the Caribbean have already raised this issue and its effects on Africa and the African diaspora in global forums. Earlier this year, the UN General Assembly adopted a resolution declaring slavery to be the gravest crime against humanity. In 2027 the UK Privy Council will hear a case on the issue.
This suggests that there is space for Africa and its allies to think creatively about ways in which companies and individuals, in addition to governments, can support reparations.
Sixth, African states should increase their efforts to promote IMF reform. Already African voices have called for fairer and more representative governance and for more resources to be allocated on a concessional basis to low-income countries in crisis. Some voices also advocate that the IMF make better use of its gold reserves to fund its concessional financing facilities. The IMF currently has gold holdings worth about US$350 billion.
While there are legal constraints on its ability to sell this gold, with some creative thinking the IMF could make more active use of this dormant asset.
Danny Bradlow in addition to his positions at the University of Pretoria and the Global Development Policy Center, Boston University is a senior fellow at the South African Institute of International Affairs and a professor emeritus at American University Washington College of Law.
Original source: https://analysis1.mil-osi.com/2026/10/28/african-countries-face-rising-economic-risks-six-ways-they-can-navigate-global-uncertainty/