Sub-Saharan Africa growth to remain steady at 4.1% in 2025 – IMF
Sub-Saharan Africa’s economic growth is projected to remain steady at 4.1% in 2025, with a modest pickup expected in 2026, driven by macroeconomic stabilisation and reform efforts in key economies, according to the International Monetary Fund (IMF).
Abebe Selassie, Director of the IMF’s African Department, disclosed this during a regional press briefing at the ongoing annual meetings of the World Bank Group and the IMF in Washington, D.C.
Selassie explained that while several economies in the region have shown resilience, resource-intensive and conflict-affected countries continue to face significant challenges.
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He said global growth remains under strain, and the outlook for commodity prices is uneven. External borrowing conditions are still tight, despite some improvement since April as sovereign spreads have narrowed and portfolio inflows have resumed.
According to him, the global trade policy and aid environment has deteriorated sharply, though many countries in the region are only modestly exposed to the direct effects. However, lower-income and fragile economies remain disproportionately affected by cuts in aid, which threatens the provision of essential services. He added that some countries are also acutely vulnerable to trade pressures, with uncertainty persisting and risks still tilted to the downside.
Selassie cautioned that macroeconomic vulnerabilities across the region remain high and that the resilience observed so far cannot be taken for granted. He said overlapping monetary, financial, external, and fiscal vulnerabilities continue to complicate the policy response to future shocks.
Rising debt service costs, he noted, are crowding out development spending, while a shift toward domestic financing is increasing the risk of a bank-sovereign nexus.
To strengthen macroeconomic stability and ensure funding for essential development needs, the IMF’s special policy recommendations emphasise two key priorities. The first is domestic revenue mobilisation, where Selassie said there is substantial scope to boost revenues through improved tax administration and policy reforms. He highlighted measures such as digitalisation, risk-based compliance strategies, and rationalization of inefficient tax expenditures.
He stressed that successful implementation would require stronger technical capacity, stakeholder buy-in, trust-building, and careful consideration of the social and distributional impacts of reforms. The second priority, he said, is strengthened debt management. This involves enhancing debt transparency and public financial management to reduce borrowing costs, support access to innovative financing instruments, and mitigate fiscal risks. Priority actions include publishing comprehensive debt data, improving budget oversight, and addressing the bank-sovereign nexus through robust prudential regulation.
Responding to a question on inflation in Nigeria, Selassie said inflation trends are consistent with the recent tightening of monetary policies, noting that these measures are beginning to filter through the economy.
“It aligns with the current policy calibration. While monetary policy has been intelligently managed, I believe there is still some distance to go before achieving the desired stability,” he said. He clarified that what is being observed is a slowdown in the rate at which prices are increasing, not a reduction in overall price levels. “This is not unique to our countries, it’s a global phenomenon but it is especially severe in our region because the cost-of-living crisis has hit our people harder than elsewhere, given their limited capacity to absorb such shocks,” he explained.
He warned that the extent of economic dislocation across households and economies due to these shocks should not be underestimated. Public debt, he noted, remains high in many countries in the region, with about 20 countries currently facing a high risk of debt distress. “Fourteen countries are at high risk, and another six are already in debt distress,” he revealed. “That is one key indicator of debt vulnerability, and other measures similarly show that public debt burdens are rising.”
Selassie emphasised that these challenges highlight the urgent need for structural reforms aimed at stimulating higher economic growth and ensuring debt sustainability. “Reforms should focus first and foremost on encouraging stronger economic growth, which is crucial to keeping debt servicing affordable. Beyond that, fiscal reforms are needed in many countries,” he said.
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He noted that the degree of revenue mobilization and expenditure reprioritisation varies across nations but remains central to the IMF’s engagement with each government.
He acknowledged that many African countries have invested heavily in infrastructure, healthcare, and education, all critical sectors for long-term development. However, he said one persistent challenge has been the inability to capture adequate returns on these investments through taxation. “There is significant potential for improved revenue mobilization, but this must go hand in hand with transparency and accountability, ensuring that the money collected is used effectively and for the right purposes,” he stated.
Selassie pointed out that public frustration about high taxation often stems from the perception that government services are inadequate. “When people complain about high tax levels, it’s often because they do not see enough public services, infrastructure, healthcare, education, to justify those taxes,” he said. “Demonstrating that tax revenues are being used properly, minimising leakages, and curbing corruption must therefore be integral to the reform agenda.”
On the issue of illicit financial flows, he explained that they take different forms, from trade and capital outflows to efforts by individuals or entities to conceal funds, and even outright illegal activities linked to corruption. He said the appropriate response must depend on identifying the specific source and nature of each flow and addressing it through targeted reforms. Selassie concluded that many of the broader economic and governance reforms being pursued across the region would also help curb illicit financial flows and strengthen the foundations for sustainable growth.
