Sub-Saharan Africa’s economy is proving more resilient than expected, but the region’s improving growth outlook is still falling short of what is needed to create enough jobs, reduce extreme poverty and raise living standards.
The World Bank now projects economic growth across the region to increase from 4.1% in 2025 to 4.3% in 2026, an upgrade of 0.3 percentage points from its April 2026 forecast.
The improved outlook reflects stronger domestic demand, better macroeconomic management and rising investment linked to the global energy transition and digital technologies.
But the recovery is taking place against a difficult backdrop. Geopolitical tensions, trade policy uncertainty, climate shocks, disease outbreaks, insecurity and tighter financial conditions continue to weigh on economic activity in several countries.
The World Bank’s latest Africa Economic Update, its biannual economic report on the region, says the growth rate remains too low to make a significant dent in extreme poverty or absorb the millions of young people entering the labour market.
“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,” said Andrew Dabalen, World Bank Chief Economist for the Africa Region.
He said the improved performance reflected years of reforms and stronger economic management, but added that the next challenge was turning economic growth into jobs and better opportunities.
Inflation and debt still constrain economies
The region’s improved growth prospects are also being tested by renewed price pressures.
Median inflation is projected to rise from 3.7% in 2025 to 5.5% in 2026, as higher global prices for fuel, fertilizer and food reverse some of the progress made in recent years.
For households, higher food and energy costs could erode the benefits of economic growth, particularly in countries where incomes remain low and social protection systems are limited.
Public debt, meanwhile, has broadly stabilized at about 57% of GDP. However, the cost of servicing that debt remains high, limiting the amount governments can devote to health, education and infrastructure.
The decline in development assistance is adding another layer of pressure.
With fewer external resources available, African governments are being pushed to mobilise more domestic revenue, strengthen local capital markets and find financing sources that are more sustainable over the long term.
Climate and geopolitical risks threaten the gains
The World Bank said the risks to the outlook remain largely on the downside.
Further geopolitical tensions could drive commodity prices higher, intensifying inflation and putting additional pressure on government finances and external balances.
Climate shocks also pose a significant threat, particularly to agriculture. A potential El Niño event could disrupt food production in parts of the region, worsening food insecurity and putting further pressure on household incomes and prices.
Tighter global financial conditions could also make borrowing more expensive and further reduce governments’ room to respond to economic shocks.
AI offers a new route to productivity
Against these pressures, the report identifies artificial intelligence as one potential source of productivity gains, better public services and new employment opportunities.
Most African countries are still at an early stage of AI adoption, with activity concentrated in a relatively small number of economies, including Kenya, Nigeria and South Africa.
The report argues that Africa’s biggest opportunity may not lie in competing to develop the world’s most advanced AI systems, but in deploying affordable, locally relevant applications that solve everyday problems.
Low-bandwidth AI tools could support education, agriculture, healthcare, financial services, logistics and public administration, particularly in areas where access to conventional services remains limited.
For that opportunity to translate into economic gains, however, countries will need to address some basic constraints.
Reliable electricity, affordable internet access, digital skills, quality data and computing infrastructure will be essential to making AI useful at scale. Governments will also need stronger institutions and technical capacity to ensure that the technology is deployed effectively and responsibly.
Dabalen said investing in the foundations of an AI-ready economy could help African countries unlock productivity gains, encourage innovation and accelerate the structural transformation needed to improve living standards and reduce poverty.
Regional cooperation could also determine how widely those benefits are shared. The World Bank points to the African Union’s Continental AI Strategy and the African Continental Free Trade Area as mechanisms that could help countries scale digital solutions and create more and better jobs.
For Africa, the challenge is therefore moving beyond a stronger growth number.
The real test will be whether the resilience now visible in the region’s economies can translate into productive employment, stronger household incomes and greater opportunities for a rapidly expanding population
