Africa Facing Polycrisis

UN Trade and Development (UNCTAD), in its Economic Development in Africa Report 2024, says that the world is in polycrisis, and Africa is on the front line of exposure. The complex global polycrisis encompasses climate-related, economic, political and technological challenges. The interconnectedness of vulnerabilities, intensified by geopolitical tensions and climate change, poses significant risks to the continent. However, Africa also possesses unique strengths, such as a young population, significant natural resources and growing regional markets and investment opportunities.

A variety of interconnected external shocks, such as geopolitical conflicts, the war in Ukraine, the global coronavirus disease (COVID-19) pandemic and inflationary pressures, have disrupted supply chains, increased costs and magnified vulnerabilities worldwide, and hit African economies hard. These shocks interact with the vulnerable socioeconomic and political structures in Africa, creating unique challenges to sustainable development. Reliance on foreign markets, volatile commodity exports, high debt and weak infrastructure have deepened the continent’s vulnerabilities.

For instance, in 2022, climate-related hazards in Africa caused $8.5 billion in damages, affecting over 110 million people. Climate change poses existential risks, particularly in agriculture-dependent economies. Severe weather events and environmental degradation threaten food security, livelihoods and economic stability. Countries with inadequate climate adaptation policies face intensified challenges from extreme weather and environmental degradation, which limits the ability to cope with crises.

In addition, in Africa, with less than 50 per cent of the population having reliable access to electricity and given a reliance on fossil fuels and the significant barriers faced in the energy transition, vulnerability to global energy price shocks is intensified. Most countries in Africa lack the infrastructure to harness hydro, solar or wind power. Building renewable energy capacity in order to reduce the reliance on fossil fuels and securing international funding for sustainable energy projects are critical for transformation and resilience in Africa; $190 billion is needed annually for energy investment, equal to 6.1 per cent of GDP of Africa.

The report emphasizes the need to promote sustainable development. African economies can strengthen resilience to trade risks caused by interconnected shocks across political, economic, energy, technological and climate fronts. There is an urgent need to diversify economies, integrate high-value supply chains and improve business conditions, especially for smaller firms.

SOURCE: based on https://unctad.org/publication/economic-development-africa-report-2024