Nigeria, South Africa, and Egypt to Lead Africa’s Economic Growth in 2025 Says United Nations
The United Nations (UN) remains optimistic about Africa's economic prospects, projecting regional Gross Domestic Product (GDP) growth to rise to 3.7% in 2025 from an estimated 3.4% in 2024. This positive outlook is largely attributed to economic recoveries in Nigeria, South Africa, and Egypt.
A recent UN report further predicts that the continent’s economic momentum will extend into 2026, with GDP expected to expand by 4.0%.
Nigeria's Economic Transition and Stabilization
Nigeria's economy has faced significant challenges due to major policy shifts, including reforms in energy subsidies and foreign exchange management. However, as the country moves past this transition phase, economic pressures are expected to ease, leading to more stable consumer prices and exchange rates.
Between 2023 and 2024, Nigeria’s central bank introduced several measures aimed at strengthening the naira, attracting foreign investment, and curbing inflation. Key policies included banning the use of dollar-based collateral for naira loans, reinstating the "willing-buyer, willing-seller" exchange rate model, and progressively increasing lending rates throughout 2024.
Despite these efforts, the full impact of these policies on Nigeria’s economy remains uncertain. By the end of 2024, the inflation rate surged to 34.8%, while the naira depreciated to ₦1,535 per dollar.
South Africa and Egypt’s Economic Recovery
In South Africa, power supply issues that previously hindered economic activity showed signs of stability in 2024, setting the stage for growth to return to pre-pandemic levels.
Meanwhile, Egypt’s economic recovery is expected to be fueled by increased revenue generation. The UN report highlights that Egypt's balance of payments improved in the first half of 2024, supported by financial aid from the International Monetary Fund (IMF) and an investment deal with the Abu Dhabi Development Holding Company.
Regional Growth Trends Across Africa
East Africa is anticipated to experience the fastest economic expansion on the continent. The UN attributes this to strong domestic demand and a rebound in international tourism, particularly benefiting countries such as Ethiopia, Kenya, Rwanda, Uganda, and Tanzania.
In contrast, Central African nations, including Chad, Equatorial Guinea, Gabon, and the Central African Republic, face economic stagnation due to declining crude oil production and sluggish recovery.
Debt Burden and Fiscal Policy Recommendations
The UN has also raised concerns about the growing debt-servicing obligations of some of Africa’s largest economies. In countries like Angola, Egypt, Ghana, Nigeria, and Uganda, interest payments on debt have, in recent years, surpassed spending on essential sectors such as education and healthcare, creating significant fiscal trade-offs.
To address these challenges, the UN recommends a strategic approach to fiscal consolidation. This includes improving the efficiency of public expenditure, restructuring subsidy programs, and implementing progressive tax policies to ensure sustainable economic growth.