African economies have shown resilience in the face of energy market disruptions linked to the Iran war, but falling foreign aid could leave the continent more exposed to future economic shocks, the International Monetary Fund (IMF) has warned.
The IMF projects Africa’s economy will grow by 4.5 per cent in 2026, slightly above its previous forecast, before accelerating to five per cent in 2027.
However, development assistance to the continent dropped significantly last year and is expected to decline by a further 12 per cent this year, Zeine Zeidane, head of the IMF’s Africa department, said on Thursday during the IMF and World Bank meetings in Bangkok.
He warned that reduced aid was limiting African countries’ ability to respond to further disruptions, including renewed energy supply problems, a sharp deterioration in global investor confidence or a severe El Niño weather event.
Persistent conflicts and insecurity also threaten economic progress and could worsen food shortages in some parts of the continent.
Despite these risks, the IMF said African countries had demonstrated an ability to adjust to difficult conditions, supported in part by economic reforms introduced in several nations.
Some mineral-rich economies are also benefiting from higher prices for strategic resources used in advanced technologies, including artificial intelligence (AI). The fund has urged governments to manage the additional revenue carefully and embrace AI to strengthen productivity and competitiveness.
African countries seek broader economic benefits
Finance ministers attending the Bangkok meetings outlined measures to create jobs, diversify their economies and establish more sustainable sources of growth.
Guinea’s Minister of Economy, Finance and Budget, Mariama Cire Sylla, highlighted a railway project connecting the Simandou iron ore deposits to the coast as part of the country’s wider economic transformation plans.
Although Guinea has substantial mineral wealth, about half of its population lives in poverty. The government hopes the Simandou project will help stimulate growth beyond the mining industry.
The challenge, Sylla explained during the discussions, is to use mining revenues to support other sectors and create new centres of economic activity despite limited public finances.
Burkina Faso’s Finance Minister, Aboubakar Nacanabo, also stressed the importance of ensuring that African countries capture more value from their natural resources, including gold, cobalt and copper.
Burkina Faso, a major gold exporter, has opened its first gold refinery as its military-led government pursues greater economic independence following a break with traditional Western partners.
Across West Africa, governments are increasingly seeking greater control over mineral resources through revised mining laws, restrictions on exports of unprocessed materials and increased state participation in the sector.
Guinea and Ghana have recently introduced restrictions on gold exports. Mali has announced plans for a gold refinery in partnership with Russia’s Yadran Group, while Ivory Coast plans to open a refinery next year.
Nacanabo identified the development of domestic value chains as a key step towards creating more economic opportunities, particularly for young people.
The IMF also pointed to artificial intelligence as a possible driver of long-term economic expansion, although its full impact on African economies remains uncertain.
Zeidane said wider adoption and adaptation of AI, alongside efforts to expand its use, could increase economic growth by more than four per cent over the next decade, based on the fund’s estimates.
He identified agriculture, education, healthcare and public services as areas where the technology could deliver significant gains.
In agriculture, AI could help address low productivity and crop yields in many African countries. Its use in education, healthcare and government services could also improve efficiency and access.
The IMF’s outlook suggests that Africa’s growth prospects remain positive despite the pressures from the Iran war and declining aid. However, sustaining that momentum will depend on how effectively governments manage external shocks, invest mineral revenues and translate economic reforms into broader development gains.
