The International Monetary Fund has modestly raised its forecast for African economic growth while warning that declining development assistance is leaving the continent increasingly exposed to future shocks.

Speaking to reporters at an IMF and World Bank meeting in Bangkok on Thursday, Zeine Zeidane, head of the IMF’s Africa department, said African economies had weathered the energy crisis linked to the Iran war.

The IMF expects African economies to grow by 4.5% this year, with growth projected to reach 5% in 2027. The current-year forecast is slightly higher than the fund’s earlier estimate.

Despite the improved outlook, Zeidane said development assistance to Africa fell sharply last year and is expected to decline by a further 12% this year. He warned that the reduction in support was limiting governments’ ability to respond to another major disruption.

“That leaves the region with little room to absorb another shock,” Zeidane said. He identified renewed energy-supply disruption, a sharp rise in global risk aversion and a strong El Nino as possible sources of additional pressure.

“Overall risks remain firmly tilted to the downside and the challenges are significant, but so is the region’s ability to adapt and move forward,” he added.

Risks and resilience

Conflict and insecurity continue to weigh on economic performance in parts of Africa and threaten food security in some regions. At the same time, many African countries have introduced reforms intended to strengthen their economic resilience.

Some countries are also benefiting from higher prices for critical minerals used in advanced technologies, including artificial intelligence. The IMF has urged governments to manage those windfalls carefully and adopt AI in ways that can improve competitiveness.

Zeidane said the IMF estimates that the adoption, adaptation and expansion of AI could increase economic growth by more than 4% over 10 years. He pointed to possible applications in agriculture, education, health and government services, while noting that the long-term effects remain uncertain.

“So, it’s not only about who benefits from AI, but the use of AI can actually make a big difference,” Zeidane said, citing the potential to improve productivity and services.

Mineral wealth and diversification

Discussions at the meeting also highlighted efforts by African governments to gain greater control over natural resources. Across West Africa, governments have pursued changes to mining codes, export restrictions and increased state ownership.

In Guinea, Mariama Cire Sylla, the minister of Economy, Finance and Budget, said a railway connecting mines in Simandou to the coast formed part of the country’s long-term economic transformation programme.

Guinea has extensive mineral resources, but half of its population is described as living in poverty. The government is relying on the Simandou iron ore project to help expand the economy.

Sylla said the country needed to use mining to support wider economic diversification. “How can we leverage mining to really develop other sectors and diversify the economy?” she asked.

“It’s really critical because financial resources are scarce. We need to create enclaves of investment. We need to create growth poles,” she said.

Burkina Faso has opened its first gold refinery, while Guinea and Ghana have restricted gold exports. Mali has said it is building a gold refinery with Russia’s Yadran Group, and Ivory Coast has announced plans to open a refinery the following year.

Aboubakar Nacanabo, Burkina Faso’s finance minister, said African countries needed to build more value chains around their natural resources. “The first step is to create the value chain,” he said, adding that the aim was “to create opportunity for our youth.”