By Onu Okorie
Sub-Saharan Africa’s economy is expected to remain resilient despite geopolitical tensions, climate shocks, declining development assistance and persistent fiscal pressures, with regional growth projected to accelerate to 4.3 per cent in 2026.
The World Bank, in its latest Africa Economic Update, raised its 2026 growth forecast for the region by 0.3 percentage points above its April 2026 projection. Growth is expected to increase from 4.1 per cent in 2025 to 4.3 per cent this year.
The World Bank said the improved outlook was supported by greater macroeconomic resilience, stronger domestic demand and increased investments associated with the global energy transition and digital technologies.
However, it warned that conflict in the Middle East, uncertainty over trade policies, tighter financial conditions, natural disasters, disease outbreaks and insecurity continued to weigh on economic activity in several African countries.
It also cautioned that the pace of growth remained insufficient to significantly reduce extreme poverty or create enough jobs for the region’s rapidly expanding labour force.
“Despite a challenging global environment, economic activity in Sub-Saharan Africa continues to demonstrate remarkable resilience, with growth forecasts upgraded for nearly three-quarters of countries in the region, including Angola, Ethiopia, Nigeria, and Zambia,” Andrew Dabalen, World Bank Chief Economist for the Africa Region, said.
Dabalen attributed the improved performance to years of reforms and better economic management, but said the next challenge was to translate economic growth into more jobs and improved opportunities.
“By investing in the foundations of an AI-ready economy, African countries can unlock productivity gains, spur innovation, and accelerate the structural transformation needed to raise living standards and reduce poverty,” he said.
Inflation, debt pressures
The report projected that the median inflation rate in Sub-Saharan Africa would increase from 3.7 per cent in 2025 to 5.5 per cent in 2026.
The World Bank attributed the expected increase partly to higher global prices for fuel, fertiliser and food, which could reverse some of the recent progress in reducing inflation.
Public debt across the region has broadly stabilised at about 57 per cent of gross domestic product. However, the bank said high debt-servicing costs continued to restrict government spending on critical sectors, including health, education and infrastructure.
With development assistance declining, African countries are facing increasing pressure to mobilise domestic resources, deepen local capital markets and secure more sustainable sources of financing.
The World Bank warned that risks to the economic outlook remained tilted to the downside.
It said further geopolitical tensions could trigger additional increases in commodity prices, intensify inflationary pressures and weaken countries’ external and fiscal positions.
Climate-related shocks, including the potential effects of an El Niño event, could also disrupt agricultural production and worsen food insecurity, while tighter financing conditions could further reduce governments’ fiscal space.
AI offers new opportunities
The special focus of the latest Africa Economic Update examines the potential of artificial intelligence to increase productivity, improve public and private services and create jobs across the continent.
The report noted that most African countries remained at an early stage of AI adoption, with activity concentrated in a relatively small number of economies, particularly Kenya, Nigeria and South Africa.
Rather than focusing primarily on developing frontier AI systems, the report said Africa’s greatest opportunity could lie in affordable, locally adapted small AI applications.
Such tools could operate in low-bandwidth environments and support sectors including education, agriculture, healthcare, finance, logistics and public administration.
The World Bank said unlocking these opportunities would require greater investment in reliable electricity, affordable internet connectivity, digital skills, quality data and computing infrastructure.
It also stressed the importance of effective governance and strong institutions to ensure that AI technologies deliver broad economic and social benefits. According to the report, technical capacity, effective implementation and regional cooperation would also be critical to scaling AI-enabled solutions across the continent.
It identified initiatives such as the African Union’s Continental AI Strategy and the African Continental Free Trade Area as potential platforms for promoting regional cooperation and expanding the use of AI.The World Bank said combining technological investment with institutional reforms and regional integration could help African economies achieve higher productivity, support structural transformation and create more and better jobs.