Africa

Chart 1 is a political map of Africa.

Africa is the world’s second-largest continent after Asia, spanning about 30.37 million km² or roughly 20% of Earth’s land area. Geographically, it straddles the Equator and is bounded by the Mediterranean Sea to the north, the Red Sea and Indian Ocean to the east, and the Atlantic Ocean to the west. The continent stretches about 8 000 km north-south and 7 400 km east-west.

Africa’s northern extremity reaches into the temperate zone, but most of the landmass lies in tropical latitudes, giving rise to generally warm climates. The Sahara Desert dominates northern Africa, at around 8.6-9 million km², it is the world’s largest hot desert, spanning from the Atlantic coast to the Red Sea. In contrast, equatorial Africa is home to lush rainforests; the Congo Basin rainforest is the planet’s second-largest after the Amazon, covering roughly 300 million hectares (3 million km²).

Between these extremes lie the Sahel (a semi-arid belt south of the Sahara) and vast savanna grasslands. Major mountain highlands punctuate the continent, especially along the Great Rift Valley in the east. Mount Kilimanjaro in Tanzania rises to 5 895 m, the highest point in Africa, while the Atlas Mountains of the northwest and Ethiopia’s highlands are other prominent uplands. Africa’s longest rivers have been cradles of civilisation: the Nile River (6 650 km) is the longest in the world, flowing northward through 11 countries to the Mediterranean, and the Congo River (about 4 700 km) is the second-longest in Africa and by far the most voluminous, draining the continent’s largest basin into the Atlantic. Other major rivers include West Africa’s Niger (approximately 4 180 km) and Southern Africa’s Zambezi (approximately 2 574 km, featuring Victoria Falls).

Africa’s diverse terrain also encompasses the Kalahari and Namib Deserts in the south, the volcanic Great Lakes region (with Lake Victoria as Africa’s largest lake), and a generally elevated plateau that gives the continent an average altitude higher than that of Europe. This rich physical geography underpins Africa’s biodiversity, from rainforests teeming with species to savannas supporting the continent’s iconic megafauna, while also posing challenges such as arid expanses and limited natural harbours (Africa’s coastline, though long, has relatively few deep indentations).

Administratively, Africa is divided into 54 internationally recognised sovereign countries (all members of the United Nations), along with a handful of territories or disputed areas (the African Union, a continental body, counts 55 member states, including the Sahrawi Arab Democratic Republic/Western Sahara). These modern states are largely a legacy of colonial history. By the late 19th century, the “Scramble for Africa,” European powers partitioned nearly the entire continent into colonies. All but two African countries, Liberia and Ethiopia, were under colonial rule in the early 20th century.

After World War II, decolonisation swept the continent: beginning in the 1950s, dozens of nations attained independence (the 1960 “Year of Africa” saw 17 new countries). By the late 1970s, most of today’s African states were sovereign. The newest African country is South Sudan, which gained independence in 2011. Crucially, the post-colonial leaders upheld the colonial borders to avoid endless territorial disputes, despite those borders often cutting across ethnic or historical lines. This has left Africa with a patchwork of states varying greatly in size and shape, from Algeria (the largest by area, 2.38 million km²) and the DR Congo to island microstates like Seychelles (455 km²). Population distribution is likewise uneven: Nigeria, for example, has over 220 million people (Africa’s most populous nation), whereas several Saharan countries and small islands have under 2 million each.

Today, all African states (including the contested Western Sahara) are members of the African Union (AU), which was founded (as the OAU) in 1963 to promote unity and development. Many countries also cooperate through regional blocs. For instance, 12 West African nations form ECOWAS, and 16 Southern African nations comprise the Southern African Development Community (SADC). These and other Regional Economic Communities (East African Community, the Intergovernmental Authority on Development (IGAD), etc.) facilitate economic and political coordination across sub-regions.

Regarding internal governance, most African countries are unitary states with central governments subdividing the country into provinces or regions for administration. A few are federations, notably Nigeria’s 36 states and Ethiopia’s ethnically based regions, granting substantial autonomy to subnational units. Capital cities and major administrative centres are spread throughout the continent, with Cairo, Lagos, Kinshasa and Johannesburg among the largest urban agglomerations. Politically, Africa’s nations exhibit a range of systems from long-standing multiparty democracies (e.g. Ghana, Senegal) to authoritarian regimes or fragile states, often reflecting the varied post-independence trajectories. Nonetheless, Africa has seen an expansion of democratic institutions since the 1990s, alongside efforts to resolve conflicts and improve governance through AU initiatives.

Africa’s countries span the full spectrum of development levels, but overall, the continent remains the least economically affluent major region. A majority of the world’s low-income countries are in Africa. The World Bank classified 22 African countries as low-income in 2023. This accounts for almost 41% of Africa’s states and over 80% of all low-income states globally. By contrast, South Asia, a region of eight countries often compared to Africa, has reduced its share of low-income economies from 100% in 1987 to just 13% in 2023. Twenty-three African nations were in the lower-middle-income bracket, while only eight (Algeria, Botswana, Equatorial Guinea, Gabon, Libya, Mauritius, Namibia and South Africa) were upper-middle-income. Only Seychelles qualified as a high-income economy by World Bank criteria. This means Africa has the fewest high-income countries of any continent. Overall, Africa’s GDP per capita remains well below the global average, reflecting challenges such as limited industrialisation, infrastructure gaps, financial constraints and historical inequalities. However, there is significant variation: for example, small resource-rich states (like Gabon or Botswana) enjoy per capita incomes far above those of large, impoverished countries (like Burundi or Niger).

Africa’s cultural and linguistic diversity is unparalleled. The continent is home to an estimated 1 500 to 3 000 languages, roughly one-third of all languages on Earth. These fall into four major language families: Afro-Asiatic (around 200 languages across North Africa and the Horn, including Arabic, Amharic, Somali, Hausa), Niger-Congo (the largest group, over 1 000 languages widespread in West, Central and Southern Africa, notably the Bantu languages like Swahili, Yoruba, Igbo, Zulu), Nilo-Saharan (around 140 languages in pockets of the Sahara and East-Central Africa, e.g. Dinka, Kanuri) and Khoisan (a few dozen click-based languages in Southern Africa).

In addition, due to colonisation, European languages serve as official tongues in many countries. English is an official language in 23 African countries, French in 21, Arabic in 13, Portuguese in 6, Spanish in one and Swahili in at least 4. Most African states are multilingual, often recognising an indigenous lingua franca alongside a colonial language for government and education. For example, Swahili (Kiswahili), an indigenous pan-African lingua franca, is widely spoken in East Africa and was recently added as an official language of the African Union.

Other widely spoken African languages include Arabic (in North Africa and the Sahel), Amharic (Ethiopia), Yoruba and Igbo (Nigeria), Fulani (across the Sahel), Oromo (Horn of Africa) and many others, each with tens of millions of speakers. This mosaic of languages can be a developmental challenge (for instance, less than 20% of students in Francophone Africa are taught in their mother tongue). Still, it is also a rich cultural heritage. Efforts are underway to promote bilingual education and preserve endangered African languages.

Parallel to its linguistic variety, Africa’s ethnic composition is extraordinarily diverse. There are over 3 000 distinct ethnic groups across the continent. By comparison, no African country (except possibly Somalia or Swaziland) is ethnically homogeneous. Most nations comprise dozens of ethnic communities; Nigeria alone has over 250 ethnic groups, DR Congo over 200, while Tanzania has more than 100 distinct groups. These groups range in size from millions-strong peoples like the Arabs of North Africa, Hausa of West Africa, Yoruba and Igbo of Nigeria, Oromo and Amhara of Ethiopia, or Bantu clusters (e.g. Shona, Zulu, Luba), to small indigenous communities numbering only a few thousand. Ethnicity, defined by shared language, culture and ancestry, remains a key identity marker for most Africans, alongside nationality.

This enormous diversity is a source of cultural richness (manifested in Africa’s variety of traditions, music, art and social structures) but also a source of social complexity and potential tension. Colonial-era borders often grouped disparate peoples into one state or split the same ethnic group across countries, sometimes contributing to ethno-political rivalries. Several of Africa’s post-independence conflicts have had ethnic dimensions, from Nigeria’s Biafra war in the 1960s to inter-ethnic violence in Rwanda, Sudan, the Ivory Coast and others. That said, most African countries have also seen long periods of peaceful coexistence among their ethnic groups, and national identities have strengthened over time. Many governments maintain a delicate balance of power among major communities, and regional organisations like the AU emphasise non-discrimination and inclusivity.

Religiously, Africa is also diverse but largely dominated by Christianity and Islam, with roughly 45% of Africans Christian and 40% Muslim, plus sizable adherents of indigenous traditional beliefs. The religious mix often correlates with geography (for example, North Africa and the Sahel are predominantly Muslim, and sub-Saharan Africa is predominantly Christian except in the Horn and parts of West Africa). Importantly, religious and ethnic identities sometimes overlap; for example, Arab and Berber populations in the north are mostly Muslim, while many Bantu groups in southern Africa are Christian, but in other cases they cut across each other (Nigeria has both Christian and Muslim Yoruba and other groups). This pluralistic tapestry of ethnicities, languages and faiths makes Africa a continent of immense cultural complexity. Pan-African institutions often celebrate this diversity as a strength, even as they acknowledge its practical challenges for unity and development.

In summary, Africa’s political map, with its intricate blend of geographical features, colonial legacies, socio-economic disparities and cultural pluralism, provides the essential context for understanding the continent’s current development path and prospects.

Chart 2 presents the population structure from 2020 to 2043 in the Current Path.

Africa’s population has been growing faster than that of any other region, rising from about 644 million people in 1990 to roughly 1.5 billion in 2024. This represents nearly 18% of the world’s population, up from just 12% in 1990. The Current Path indicates that Africa’s population will continue to expand rapidly, reaching approximately 2.3 billion by 2043. By comparison, South Asia’s population (currently about 2.0 billion) is slightly larger today but growing more slowly. Africa is on course to overtake South Asia in total population around the middle of the century due to its higher growth rate. The United Nations forecasts that more than a quarter of the world’s people will be African by 2050, underscoring Africa’s demographic weight in the coming decades.

Africa is demographically the world’s youngest continent, with a median age of less than 20 years, far lower than that of any other region. In 2019, the median age in Africa was 19.7 years, compared to 31 years in South America and about 27 years in Southern Asia. This youthful age structure is reflected in the very large share of children in Africa’s population. As of 2023, an estimated 40% of Africans were under the age of 15, compared to about 25% of the global population being under 15 years. South Asia’s population is also youthful but somewhat older, with a median age in the late 20s and a smaller proportion of children due to faster fertility decline. Latin America’s demographic transition is even more advanced: its median age is now 31.7 years, up from 18 years in 1950, and only about 22% of Latin Americans are under 15. These comparisons highlight that Africa stands out for its youthful demographic profile, which brings opportunities and challenges. On one hand, a young population can energise a continent’s workforce and consumer base; on the other, it creates immense demand for basic services like education, healthcare and jobs for the growing ranks of youth.

Africa’s age structure is gradually evolving as the continent undergoes a slow demographic transition. Under the Current Path, the share of children will decline over time, even as absolute numbers still increase. By 2043, children under 15 will make up roughly one-third of Africa’s population, indicating a slowly narrowing base of the population pyramid. This decline is driven by falling fertility rates and improved child survival. Africa’s total fertility rate (TFR), which is the average number of children per woman, has begun to decrease from very high levels. It fell from about 6.6 in 1960 to 3.8 in 2024, and will drop to about 3.2 by 2043 under the Current Path. Nevertheless, African fertility remains high compared to other regions. For example, South Asia’s TFR is around 2.2 (near the replacement level) and in Latin America it is even lower at about 1.8.

Africa’s higher birth rates mean its population will continue growing faster and longer than elsewhere. In fact, five of the eight countries expected to account for over half of global population growth through 2050 are in Africa. In short, Africa’s demographic transition is in progress but lags behind peer regions: fertility is declining gradually and more children are surviving to adulthood, which will slowly reduce the youth dependency burden in the decades ahead. However, until fertility falls further, the continent’s population momentum will remain strong and will keep adding large numbers of people each year, even as growth slows modestly.

The share of the working-age population (15–64 years) is rising due to these trends. In 2023, about 56% of Africans were of working age, up from roughly 50% in the 1980s. In other words, the dependency ratio (the ratio of children and elderly to working-age adults) will improve over the next two decades. This is a positive development because a higher working-age share creates the potential for a demographic dividend, boosting economic growth when more people are in the labour force relative to dependants. By 2043, Africa’s working-age bracket will reach about 61% of the population under the Current Path, which is equivalent to roughly 1.6 working-age persons per dependant, inching closer to the threshold of 1.7 workers per dependant often seen as necessary to decisively reap a first demographic dividend. For context, the global average today is about 67% working-age (around two workers per dependant), a level that East Asia and Latin America have already surpassed. Africa is moving in the same direction: the number of dependants per adult is slowly falling. The labour force is set to expand substantially. Africa’s working-age population is projected to roughly double by 2050, which could fuel faster economic growth if those people can be productively employed.

Africa will also see growth in its elderly population. Though the share of elders remains small, the proportion of people aged 65 and above will rise from about 3.7% in 2023 to around 5.4% by 2043. Life expectancy on the continent will rise from 66 years in 2024 to 72.2 years by 2043 under the Current Path. This greying of the population is modest compared to other regions; Europe and East Asia have over 15% of their population above 65 years, but it signals an emerging need for policies and programs to support an ageing cohort. Healthcare systems and social services in Africa will increasingly need to cater to the elderly even as they continue to focus on the young. Improving pension systems, elderly healthcare and social safety nets will become more important as the absolute number of African seniors grows.

Overall, Africa’s evolving population structure presents a two-sided dynamic for policymakers. On one side is the promise of a massive working-age cohort that, if equipped with skills and jobs, can significantly boost productivity and development, the so-called demographic dividend. On the other side is the sobering reality that this dividend is not automatic. The swelling ranks of youth and young adults will put tremendous pressure on job creation, education and health services in the near term. Many African economies already struggle with high youth unemployment and underemployment, challenges that could intensify if economic growth and job creation do not keep pace with labour force growth.

The next 20 years are thus a critical period to implement policies that accelerate the demographic transition and harness its benefits. These include investing in girls’ education, expanding access to family planning, improving child survival and health, and stimulating economic sectors that can absorb young workers. Such measures can help to speed up the decline in fertility and enhance the productivity of the future workforce. Without sufficient investment in human capital and economic opportunities, the demographic dividend could be deferred or missed, leaving a large youth population frustrated by a lack of prospects.

Chart 3 presents a population density map of Africa for 2023.

Africa’s population distribution reflects a complex interplay of geography, economic opportunity and historical settlement patterns. The continent’s 1.5 billion people are unevenly spread, with significant concentrations in the fertile river basins, coastal zones, megacities and highland regions. The Nile Valley, the West African coastal belt and the Great Lakes region are among the most densely populated areas. At the same time, vast expanses such as the Sahara Desert, the Kalahari Desert and parts of the Sahel remain sparsely inhabited due to harsh climatic conditions.

Urbanisation continues to reshape Africa’s demographic landscape, with megacities such as Lagos, Cairo, Kinshasa, Johannesburg and Nairobi emerging as critical hubs of economic activity and migration. In 2023, the continent’s average urbanisation rate was about 45%, but this masks sharp contrasts across income groups and regions. North Africa is the most urbanised while upper-middle-income countries, such as those in Southern Africa, generally also record higher urbanisation levels, often above 65%, while low-income, primarily agrarian economies in Central and East Africa remain predominantly rural.

Regional differences are pronounced. North Africa exhibits dense populations along Mediterranean coasts and river valleys. At the same time, West Africa has large rural populations and rapidly growing urban clusters along trade corridors from Abidjan to Lagos. East Africa shows high rural density in fertile highlands, particularly in Ethiopia, Rwanda and Uganda. At the same time, Southern Africa is more urbanised, with population spread influenced by mining, industry and service hubs.

Compared with South Asia, Africa has a lower overall population density, around 52 people per square kilometre versus South Asia’s 308. However, its urban centres are growing faster in relative terms, reflecting accelerating rural-to-urban migration. Similarly, South America shows a more even spread of urbanisation across its territory. In contrast, Africa’s population distribution remains heavily concentrated in specific ecological and economic zones, leaving large areas sparsely populated.

From a policy perspective, the population distribution and rapid urbanisation rates underscore the need for spatial planning, infrastructure investment and regional economic integration to balance development between densely populated urban areas and underserved rural and semi-arid regions. This requires targeted investments in urban planning, transport corridors, energy access and digital connectivity to bridge geographic divides and unlock the full economic potential of both urban growth poles and rural economies. 

Chart 4 presents the proportion of the population living in urban and rural areas between 1990 and 2043 in the Current Path.

Africa has undergone a steady and transformative urbanisation process over the past three decades. The proportion of people living in urban areas has risen from approximately 31% in 1990 to 45% in May 2025, driven by rural-to-urban migration, natural urban population growth and the expansion of secondary cities. This trend will continue under the Current Path, with the level of urbanisation surpassing 50% around 2037/38 and reaching 52.1% by 2043. From a comparative perspective, Africa’s levels of urbanisation are lower than South America’s, which is currently over 80%, but is converging toward Asia’s, which is currently 53% (albeit with greater variation between countries and regions).

Africa’s urbanisation will advance across all income groups, but at different speeds and from different baselines. Upper-middle-income African countries will remain the most urbanised, increasing from nearly 70% in 2023 to 76.5% in 2043, reflecting both their mature urban systems and continued economic pull of metropolitan centres. Lower-middle-income countries will see urbanisation rise from 49.2% to almost 58% over the same period, driven by industrialisation corridors, agricultural transformation and expanding services sectors. Low-income countries, although starting from a low base, will also experience a notable shift, from 32.5% in 2023 to 41.6% in 2043, as demographic pressures, infrastructure investment and climate-related livelihood changes accelerate migration to towns and cities.

Despite these trends, rural populations will continue to grow in absolute terms in many parts of Africa, especially in low-income countries where agriculture remains the primary livelihood, keeping pressure on rural services and livelihoods. This dual growth of urban and rural populations poses a spatial planning challenge. Urban centres require large-scale infrastructure upgrades, affordable housing and job creation strategies. At the same time, rural regions will need sustained investment in connectivity, agricultural value chains and essential services to prevent uneven development and rising inequality.

Harnessing the economic potential of this urban transition, while avoiding the pitfalls of unplanned growth, will be central to achieving Agenda 2063 targets for inclusive and sustainable development and SDG 11 on sustainable cities. However, as rapid urbanisation coexists with expanding absolute rural populations in many low-income countries, policy priorities therefore need to balance city-region investments (mass transit, affordable housing, resilient infrastructure, serviced land and municipal finance reforms) with rural connectivity and basic services (all-weather roads, digital links, electricity, water and sanitation) to avoid widening spatial inequality. This is consistent with the AfDB’s High 5s (“Improve the quality of life,” “Integrate Africa,” “Industrialise Africa”, “Feed Africa” and “Light up and Power Africa”) and with removing logistics bottlenecks to unlock the African Continental Free Trade Area (AfCFTA) market access for firms in both metropolitan and hinterland locations.

Chart 5 presents a stacked area graph that includes each country in Africa’s economy from 1990 with a forecast to 2043, including the associated growth rate.

Africa’s economy has expanded substantially over the past three decades, with GDP at market exchange rates (MER) rising from almost US$1 trillion in 1990 to US$2.66 trillion in 2023, representing an average annual growth rate of 3.3%. Under the Current Path, GDP (MER) will more than double, reaching US$6.36 trillion by 2043, with average annual growth accelerating to 4.6% between 2024 and 2043. While this trajectory reflects steady progress, it remains below the 7% annual growth target envisioned in the African Union’s Agenda 2063 for achieving inclusive and sustainable prosperity.

Growth patterns differ markedly across income groups. The Current Path suggests that low-income countries will outpace all others, expanding at an average rate of 6.31% annually between 2024 and 2043, a reflection of the catch-up effect, rapid urbanisation and demographic momentum, followed by lower-middle-income economies at 4.65%, and upper-middle-income countries at 2.57%. The catch-up dynamic is consistent with Agenda 2063 and AfDB’s High 5 priorities, which emphasise accelerated growth in the least-developed economies through industrialisation, agricultural transformation and infrastructure-led integration.

Africa’s average growth has often trailed developing Asia, particularly South Asia, which the World Bank and IMF forecast to maintain the highest growth rates globally, about 5.8% in 2025 and averaging 6.2% in 2026-27, driven by strong private investment, large domestic markets and diversified exports. In contrast, Latin America and the Caribbean (LAC) are forecasted to grow by a modest 2.3-2.5%, constrained by low productivity growth, political uncertainty and structural rigidities. This positioning leaves Africa between a high-performing Asia and a slower-growing LAC, but with much greater volatility due to commodity dependence and recurrent shocks.

Africa’s growth trajectory is shaped by a complex interplay of structural drivers and persistent constraints. The continent’s youthful demographics and rapid urbanisation are expanding domestic markets and labour supply, offering the potential for a demographic dividend similar to that once leveraged in parts of East and South Asia. However, unlike South Asia, which is further along in its fertility transition, Africa’s demographic window will only open fully with substantial investments in education, healthcare and job creation.

Economic performance is further constrained by heavy commodity dependence, with over half of African economies classified as commodity-dependent by UNCTAD, exposing them to price volatility and external shocks, a stark contrast to South Asia’s manufacturing- and services-led model and parts of Latin America with more diversified export baskets. Infrastructure and investment gaps, particularly in energy, transport and digital connectivity remain significant, keeping productivity low and trade costs high.

While Africa leads globally in mobile-money penetration, according to Global Findex, access to long-term credit and capital, particularly for small to medium enterprises (SMEs) and infrastructure, remains limited compared to South Asia and LAC. The AfCFTA offers a unique opportunity to reshape the continent’s growth model by boosting intra-African trade and building regional value chains. However, realising this potential requires accelerated investment in connecting infrastructure, industrial capacity, harmonised standards and stronger trade facilitation.

Africa’s growth potential is high, but its trajectory remains volatile. To match South Asia’s pace and structurally outpace LAC, the continent must diversify exports, strengthen governance, deepen regional integration, accelerate infrastructure development, mobilise private capital and invest in human capital at scale. These priorities are central to policy frameworks such as the Agenda 2063 First and Second Ten-Year Implementation Plans (FTYIP and STYIP, the AfCFTA, the Programme Infrastructure Development for Africa (PIDA), and strategies of regional economic communities. Implementing these measures would help unlock the demographic dividend, raise productivity and sustain higher growth rates. Without decisive action, Africa risks falling short of its potential, particularly when compared to peer regions that have successfully harnessed structural transformation to achieve rapid and sustained development.

Chart 6 presents the size of the informal economy as a per cent of GDP and in absolute terms, as well as the per cent of total non-agriculture labour involved in the informal economy, from 2020 to 2043.

In 2023, Africa’s informal sector accounted for 26.3% of GDP, nearly double the share observed in South Asia (approximately 14%) and South America (about 13%), and employed almost 58% of the labour force, a rate between that of South America (approximately 44.7%) and South Asia (almost 78%). Under the Current Path, this contribution will decline modestly to 24.7% of GDP and 53.1% of employment by 2043, signalling gradual structural transformation but leaving informality entrenched as a dominant labour market feature.

Informality is more pronounced across Africa’s income groups in lower-middle-income and low-income countries. In 2023, informal GDP shares stood at 30.6% and 31.7% for these groups, respectively, compared with just 14.7% for upper-middle-income countries. Under the Current Path, these figures will fall to approximately 27% for lower-middle-income, 28.2% for low-income and 13.8% for upper-middle-income economies by 2043. Employment patterns follow a similar trend: upper-middle-income countries’ informal employment will remain relatively low, inching up from 22.7% in 2023 to 23.4% in 2043, while lower-middle-income and low-income countries will see declines from 57.5% to 54.2% and approximately 66% to 56.5%, respectively.

Africa’s slower pace of economic formalisation reflects a combination of labour market informality traps, weak industrial absorption capacity and the persistence of subsistence and low-productivity service activities. While South America has reduced informality through stronger social protection, tax reform and industrial upgrading, and South Asia is benefiting from export-oriented manufacturing, Africa’s path has been constrained by low levels of human capacity development, poor infrastructure, underdeveloped manufacturing bases, inadequate SME financing and regulatory burdens.

Upper-middle-income African countries are best positioned to reach South American informality levels (less than 13% GDP share) before 2043, provided they expand SME formalisation incentives, digitise business registration systems and implement targeted tax reforms. Lower-middle-income countries could make substantial gains if they integrate regional value chains, supported by targeted skills development, export-oriented industrial policy and the digitalisation of microfinance. For low-income countries, foundational reforms, such as investing in agro-processing hubs, expanding basic infrastructure and strengthening social safety nets, are essential to shift large informal agricultural labour pools into semi-formal manufacturing and services.

Across all income groups, aligning formalisation strategies with Agenda 2063’s industrialisation and inclusive growth targets will be critical to maximising fiscal revenue, boosting productivity and sustaining poverty reduction. Key policy guidance can be drawn from the AU’s Labour Migration Governance Framework, which supports cross-border labour mobility and formal sector opportunities, and the ILO’s Recommendation No. 204 on transitioning from the informal to the formal economy, which provides direction on legal, institutional and social protection reforms. Together, these frameworks emphasise the need for labour-intensive manufacturing, targeted skills upgrading, digitalisation of microenterprises and expanded social protection coverage. These interventions can reduce vulnerability, increase productivity and create stronger incentives for formal participation across Africa’s diverse economies.

Chart 7 depicts GDP per capita in the Current Path from 1990 to 2043.

Africa’s GDP per capita, measured in purchasing power parity (PPP), increased from US$3 790 in 1990 to US$4 850 in 2023, reflecting an average annual growth rate of just 0.8%. This rate is significantly lower than that of peer regions, 3.7% in South Asia and 1.1% in South America over the same period. Africa now has the lowest GDP per capita of the three regions, having been overtaken by South Asia in 2014. In 2023, South Asia’s GDP per capita reached US$6 560, while South America’s was US$14 780. Under the Current Path, Africa’s per capita income will grow slowly, at 1.2% annually, to US$6 210 by 2043, still trailing its peers, South Asia at 2.8% and South America at 1.5% over the 2024-2043 period because of rapid population growth, modest economic growth rates and relatively high levels of inequality.

The average GDP per capita for upper-middle-income African countries will expand from US$13 000 in 2023 to US$14 870 by 2043 at just 0.68% annually, roughly matching South America’s current average. The average for lower-middle-income countries will grow from US$5 880 to US$7 650 at 1.4% annually. In contrast, that for low-income countries will expand fastest, from US$1 850 to US$3 060 at 2.5% annually, reflecting catch-up effects from a low base, a pattern consistent with the convergence hypothesis in growth theory.

This modest per capita income growth is shaped by enabling factors and structural bottlenecks. On the positive side, Africa’s demographic profile, resource endowments and rapid urbanisation create a foundation for market expansion, industrialisation and agglomeration economies. Regional integration through the AfCFTA and the spread of digital innovation, especially mobile financial services, offer potential productivity gains and inclusion benefits, echoing McMillan and Rodrik’s findings on structural change as a growth driver.

However, these merits are offset by deep-seated constraints: low productivity in agriculture and manufacturing, overreliance on volatile commodity exports, infrastructure deficits in energy, transport and logistics, and acute skills mismatches. Persistent governance challenges, political instability and climate vulnerabilities further undermine resilience and deter investment, reflecting the institutional quality-growth nexus highlighted in Robinson and Acemoglu’s work.

The Current Path trajectory falls short of the African Union’s Agenda 2063 and the African Development Bank’s High 5s, aiming for sustained, inclusive and high-growth pathways that would elevate most African countries to upper-middle- or high-income status by mid-century. Achieving these ambitions requires accelerating structural transformation through industrial policy and value addition, strengthening human capital via universal education and healthcare (SDGs 3 and 4), investing in renewable energy and digital infrastructure to lower costs and increase competitiveness, and mainstreaming climate resilience into economic planning. Without these interventions, Africa risks maintaining a growth path that narrows, but does not close, the per capita income gap with South Asia and South America.

Chart 8 presents extreme poverty as per cent and total numbers of the population for the Current Path, from 2020 to 2043.

In 2022, the World Bank updated the poverty lines to 2017 constant dollar values as follows:

• The previous US$1.90 extreme poverty line is now set at US$2.15, also for use with low-income countries.
• US$3.20 for lower-middle-income countries, now US$3.65 in 2017 values.
• US$5.50 for upper-middle-income countries, now US$6.85 in 2017 values.
• US$22.70 for high-income countries. The Bank has not yet announced the new poverty line in 2017 US$ prices for high-income countries.

Monetary poverty only tells part of the story, however. In addition, the global Multidimensional Poverty Index (MPI) measures acute multidimensional poverty by measuring each person’s overlapping deprivations across ten indicators in three equally weighted dimensions: health, education and standard of living. The MPI complements the international US$2.15 a day poverty rate by identifying who is multidimensionally poor and also shows the composition of multidimensional poverty. The headcount or incidence of multidimensional poverty is often several percentage points higher than that of monetary poverty. This implies that individuals living above the monetary poverty line may still suffer deprivations in health, education and/or standard of living.^[x]

Africa has made notable progress in reducing income poverty since the 1990s. The share of people living in extreme poverty, defined as living on less than US$2.15 per day, fell from 45.5% (293 million people) in 1990 to around 31% (461 million people) in 2023. This is a substantial improvement, but still lags behind peer regions. South Asia, for example, reduced extreme poverty from 50% in 1990 to just 9% in 2023, while South America cut its rate from 16.3% to about 3% over the same period. The Current Path suggests that Africa’s extreme poverty rate will fall to 19.1% (440 million people) by 2043, yet this will remain far above South Asia’s 2.5% and South America’s 2%, converging towards minimal rates.

The persistence of high absolute numbers, forecasted at nearly double the 1990 figure by 2043, is driven by rapid population growth, insufficient pro-poor growth strategies, relatively high levels of inequality and structural constraints in labour absorption. While most large South Asian economies have transitioned into middle-income status, many African states, especially in the Sahel and parts of Central Africa, remain trapped in cycles of low productivity, vulnerability to commodity shocks and fragility. This gap underscores the urgency for inclusive economic transformation as articulated in the African Union’s Agenda 2063 and AfDB’s High 5s, which prioritise industrialisation, economic diversification and job creation as levers for poverty eradication.

Disaggregating by income group shows the scale of the challenge. In low-income African countries, extreme poverty will decline from 44.6% in 2023 to 26.8% in 2043, but absolute numbers will stagnate at around 271 million people, peaking at 304 million around 2029–2030. In lower-middle-income countries, the extreme poverty rate will fall from 23.4% to 13.6%, with the number of poor decreasing from 175 million to 154 million. In upper-middle-income countries, poverty will drop from 11.3% to 9.3%, though numbers will edge up slightly from 14.5 million to 14.8 million. These differences highlight the asymmetric capacity of African economies to translate growth into broad-based welfare improvements.

However, monetary poverty alone does not capture the full extent of deprivation in Africa. The 2024 Global Multidimensional Poverty Index (MPI) reveals that around 52% of the population in sub-Saharan Africa lives in multidimensional poverty, far above the global average and more than double the region’s income poverty rate. This translates to roughly 544 million people deprived of health, education and living standards across 46 countries. Africa accounts for nearly half of the 1.1 billion people worldwide in acute multidimensional poverty, and more than half are children. Conflict-affected areas, such as parts of the Sahel, Sudan and the DR Congo, have the highest deprivation levels, where progress has stalled or reversed. By 2030, almost 60% of the world’s extreme poor are expected to live in conflict-affected economies, up from just over half now.

Children bear a disproportionate share of the burden; 317 million in sub-Saharan Africa are multidimensionally poor, and almost 27% of children under five suffer from severe food poverty. These overlapping deprivations create intergenerational poverty traps, where lack of nutrition, education and health care reinforce low productivity and limited economic mobility.

Multidimensional poverty remains significant even in relatively wealthier African economies. Namibia, an upper-middle-income country, has 40.9% of its population living in multidimensional poverty and another 19.2% vulnerable. In Ethiopia, despite its projected transition to middle-income status by 2025, 68.7% of the population was multidimensionally poor as of 2019. In the DR Congo, conflict and infrastructure collapse have left 3.9 million in emergency hunger and 23.8 million in crisis levels, figures that reveal poverty well beyond income measures.

Tackling poverty in Africa, therefore, requires a dual-track strategy that addresses both income and multidimensional poverty. On the income side, accelerating structural transformation through labour-intensive industrialisation, agricultural modernisation and intra-African trade via the AfCFTA is key. On the multidimensional front, investments must target universal access to healthcare, quality education, safe water, sanitation and affordable housing. In fragile contexts, this must be coupled with peacebuilding, governance reforms and climate resilience. Child-focused nutrition and social protection are critical to break intergenerational poverty traps. Aligning these interventions with Agenda 2063’s Aspiration 1 (A Prosperous Africa) and SDGs 1, 3, 4 and 8 will ensure that poverty reduction is embedded within a broader economic transformation agenda, narrowing the gap with South Asia and South America and reducing the risk of a permanent low-income equilibrium.

Chart 9 shows the Continental Development Plan.

Agenda 2063 is the continental umbrella. It sets the long-term vision, “The Africa We Want”, and is executed through successive Ten-Year Implementation Plans. The Second Ten-Year Implementation Plan (STYIP, 2024–2033) reframes this decade as one of acceleration, translating lessons from the first plan into tighter results frameworks, clearer institutional responsibilities and stronger financing and monitoring arrangements. In practice, the STYIP is the hinge: it links the high-level aspirations of Agenda 2063 to the sectoral and regional plans that actually move projects, money and regulations on the ground.

Market integration and industrialisation anchor the economic transformation agenda, and here the AfCFTA is the flagship. AfCFTA is explicitly branded by the AU as an Agenda 2063 project because dismantling tariff and non-tariff barriers, opening services markets and enabling movement of persons are the levers that turn a fragmented continent into a single production and demand base. The AU’s 2023 theme, “Acceleration of AfCFTA implementation”, underlined that linkage. Operational instruments such as the Pan-African Payments and Settlement System (PAPSS) reduce currency-conversion frictions and aim to make cross-border trade settle in local currencies. At the same time, the Single African Air Transport Market (SAATM) connects people and freight by liberalising skies, conceived as Agenda 2063 flagships that make AfCFTA tradeable in practice.

Infrastructure is the connective tissue that allows integration to translate into growth. The Programme for Infrastructure Development in Africa - Priority Action Plan (PIDA-PAP 2 for 2021–2030) curates a portfolio of regional energy, transport, digital and transboundary water projects selected to reflect Agenda 2063 priorities, using an integrated corridor approach to crowd-in private capital and lift bankability. In other words, PIDA-PAP2 is the hard-asset pathway through which Agenda 2063’s aspirations for an integrated, competitive Africa become investable projects.

Productive transformation in food systems sits under the Comprehensive Africa Agriculture Development Programme (CAADP) and the Malabo Declaration (2014–2025), which AU leaders designed to push agricultural productivity, resilience and trade as the foundation for inclusive growth. The Malabo era culminates in 2025 and is being succeeded by a Post-Malabo roadmap; both are deliberately aligned to Agenda 2063 because raising on-farm productivity, cutting food import dependence and scaling agro-processing are preconditions for broad-based industrialisation, poverty reduction and export diversification in the 2063 horizon.

Human capital, science and digital are the capability stack of Agenda 2063. The AU’s Science, Technology and Innovation Strategy for Africa 2034 (STISA-2034) is the updated science agenda meant to drive innovation-led growth and support industrial upgrading, health security and climate resilience; it is framed explicitly as a delivery instrument for Agenda 2063. In parallel, the Digital Transformation Strategy for Africa (2020–2030) provides the policy scaffolding for connectivity, data governance and digital trade, again positioned by the AU as aligned with Agenda 2063 and the SDGs, with the goal of an integrated and inclusive digital society and economy. Together, STISA-2034 and the digital strategy equip countries to exploit AfCFTA scale effects, adopt standards and build regional value chains in knowledge- and data-intensive sectors.

Climate and health security are the resilience pillars that keep growth durable along the 2063 path. The AU Climate Change and Resilient Development Strategy & Action Plan (2022–2032) is deliberately framed as an Agenda 2063 support instrument, aligning adaptation, mitigation and finance to protect development gains and open access to climate capital. On health, the Africa CDC Strategic Plan (2023–2027) operationalises the “New Public Health Order,” linking surveillance, manufacturing, workforce and regulation (via the African Medicines Agency) to Agenda 2063’s prosperity and human-development aspirations. In both domains, the message is the same: resilience is not peripheral to Agenda 2063; it is a core enabler of its macro-objectives.

Regional Economic Communities (RECs) translate Agenda 2063 into regional delivery compacts. SADC’s Vision 2050 and its Regional Indicative Strategic Development Plan (RISDP) 2020-2030 were explicitly aligned to Agenda 2063 by ministerial directive and now prioritise industrialisation, infrastructure, human capital and cross-cutting climate goals in a way that mirrors the continental plan. ECOWAS Vision 2050 likewise states its linkage to Agenda 2063 and Agenda 2030, and the EAC’s Vision 2050 and Sixth Development Strategy anchor targets in both Agenda 2063 and the SDGs while pushing trade, industrialisation and digital transformation. The net effect is a cascading architecture: from continental goals to regional strategies to national plans, improving coherence and measurability.

What does this integrated architecture imply for implementation? First, Agenda 2063 is no longer abstract: it is operationalised through AfCFTA, PIDA-PAP2, CAADP/Post-Malabo, STISA-2034, the Digital Strategy, the AU Climate Strategy and the Africa CDC plan, each with defined institutions and scorecards under the STYIP. Second, delivery depends on knitting these plans together at the point of execution, for example, using AfCFTA rules and PAPSS to make regional agro-processing investments (PIDA corridors) bankable, while STISA-2034 and the Digital Strategy build the skills and data pipes that firms need, and the Climate Strategy de-risks projects for concessional finance. Third, RECs act as the last-mile orchestrators, aligning regional regulations, logistics and standards so that national reforms add up to continental outcomes. The through-line is clear: Agenda 2063 provides the compass; the sectoral and regional plans provide the routes; and the STYIP is the dashboard that keeps the convoy on schedule.

Chart 29 presents GDP per capita in purchasing power parity (PPP) in the Current Path and each of the eight sectoral scenarios. The data is from 2020 with a forecast to 2043.

On the Current Path, Africa’s GDP per capita (PPP) rises from US$4 850 in 2023 to US$6 210 by 2043. While this suggests moderate gains, the pace remains insufficient to unlock the continent’s full potential or move decisively beyond the middle-income trap. This sluggish improvement highlights the structural disconnect between aggregate GDP growth and household welfare, aggravated by rapid population growth, high dependency ratios and the prevalence of informal and low-productivity employment. Compared with South Asia, which has leveraged industrialisation and human capital gains to sustain faster per capita growth, and South America, which maintains higher absolute income levels despite slower growth, Africa risks falling further behind unless growth is translated more effectively into broad-based improvements in household incomes and other indices of progress.

Contrastingly, the scenario analysis shows that targeted reforms can deliver higher and more inclusive growth. Among these, the AfCFTA scenario produces the largest gains, raising GDP per capita to US$6 590 by 2043, followed by the Governance scenario, which lifts it to US$6 500. These outcomes highlight how regional integration and institutional effectiveness are economy-wide multipliers, reinforcing productivity, competitiveness and resilience.

Other scenarios also contribute positively, though with smaller gains. The Demographics and Health scenario lifts GDP per capita to US$6 420, highlighting the benefits of improved health outcomes and a more favourable dependency ratio. The Manufacturing scenario raises it to US$6 400, underscoring the productivity dividends of industrialisation and value addition. The Agriculture and Financial Flows scenarios push GDP per capita to US$6 370, reflecting the importance of food security, rural transformation and stronger investment inflows. The Education scenario yields a similar though slightly smaller gain at US$6 350, emphasising the long-term returns of human capital investment. The Large Infrastructure and Leapfrogging scenario adds the least increment, raising GDP per capita to US$6 310, as much of its impact lies in enabling rather than directly driving productivity growth. In addition, it must be noted that some elements relating to infrastructure, such as potable water, improved sanitation and irrigation are included in the relevant scenarios and not in the Large Infrastructure and Leapfrogging scenario.

While the sequence of some scenario impacts differs by income group, AfCFTA and governance remain the top drivers. Thus, for Africa to unlock its full demographic and structural potential, AfCFTA and governance reforms must remain the cornerstone of its long-term development agenda under frameworks such as Agenda 2063 and the SDGs. In upper-middle-income countries, the Large Infrastructure and Leapfrogging scenario ranks third, reflecting the greater role of connectivity and digitalisation in more advanced economies. By contrast, the Demographics and Health scenario contributes the lowest incremental gain, as fertility and mortality rates are already relatively lower. In lower-middle-income countries, the Manufacturing scenario ranks third, underscoring the centrality of industrialisation in economies with expanding labour forces and urbanising populations. The Demographics and Health scenario follows in fourth place, reflecting the gradual but slower demographic transition in these countries. In low-income countries, agriculture remains critical. The Agriculture scenario ranks third, highlighting the importance of food systems and rural productivity for poverty reduction. The Demographics and Health scenario follows, pointing to the role of fertility decline, improved health and reduced child mortality in shaping income gains.

The large impact of the AfCFTA scenario underscores the transformative impact of continental trade integration. By reducing tariff and non-tariff barriers, harmonising rules of origin and improving trade facilitation, AfCFTA creates a unified African market that allows firms to exploit economies of scale, reorganise into regional value chains and access new opportunities in manufacturing and services. The World Bank suggests that full AfCFTA implementation could increase real incomes in Africa by around 7%  or US$450 billion by 2035, driven largely by trade-facilitation and services liberalisation rather than tariffs alone. This explains why gains are evident across all income groups: upper-middle-income economies benefit from scaling competitive industries. In contrast, low- and lower-middle-income economies gain through cheaper inputs, expanded markets and job creation in agro-processing and light manufacturing. However, the magnitude of gains differs; countries with stronger industrial bases and logistics infrastructure convert a greater share of integration benefits into per capita growth, while poorer economies experience delayed effects until complementary investments in roads, border posts, standards agencies and skills catch up.

The Governance scenario demonstrates that strengthening institutions delivers equally powerful returns. Improved government effectiveness, better policy implementation and reduced corruption enhance investor confidence, raise the efficiency of public spending and lower transaction costs across the economy. Empirical evidence from the World Bank’s Worldwide Governance Indicators (WGI) shows a strong correlation between institutional quality and income per capita. At the same time, AfDB’s outlook for 2024 confirms that governance reforms underpin higher growth and investment flows across African sub-regions. Here too, income group differences matter: low-income countries enjoy the largest marginal returns from basic improvements in public financial management, service delivery and procurement integrity; lower-middle-income countries gain from regulatory reforms that formalise firms and deepen access to credit; and upper-middle-income countries benefit from second-generation reforms such as state-owned enterprise restructuring, competition policy and judicial efficiency.

Overall, the sequence and magnitude of all eight scenario gains underscore the complementarity of reforms. Infra-Africa trade integration, governance reforms and industrial development mutually reinforce one another, while education, health, agriculture and infrastructure create the enabling conditions for sustained growth. The results highlight that reform in one sector is sufficient on its own; instead, an integrated reform agenda, rooted in the aspirations of Agenda 2063, is necessary to accelerate convergence, avoid the middle-income trap and secure a future of shared prosperity for Africa’s growing population.

Chart 30 presents poverty in the Current Path and for each scenario, from 2020 to 2043. The user can select the number of extremely poor people or the percentage of the population.

Poverty remains one of Africa’s most persistent development challenges, with nearly one-third of its population living below the extreme poverty threshold of US$2.15 per day (2017 PPP) in 2023. Under the Current Path, progress is steady but insufficient: poverty falls from 31% (461 million people) in 2023 to 19.1% of the population (440 million people) by 2043. While this decline represents important gains, the sheer scale of Africa’s population growth means that hundreds of millions will remain trapped in deprivation. Compared to South Asia and South America, which have experienced much sharper declines in poverty since the 1990s, albeit with lower rates of population growth, and through rapid industrialisation, export diversification and robust social protection systems, Africa’s baseline trajectory underscores the risk of entrenched inequality and slow structural transformation.

Among the sectoral scenarios, the Governance scenario delivers the most substantial impact, reducing poverty to 17.4% (400 million people) by 2043. This outcome underscores how institutional effectiveness, transparent public spending and stronger accountability mechanisms directly translate into improved service delivery, equitable resource distribution and broader welfare gains. Remember that the Governance scenario includes social welfare transfers, positively impacting poverty. The Education and AfCFTA scenarios follow closely at 17.5% (approximately 402 million people), though driven by different mechanisms. Education expands human capital, improves labour market readiness and enhances productivity, while AfCFTA accelerates job creation in tradable sectors, stimulates SMEs and improves household incomes through deeper regional integration.

The Agriculture scenario brings poverty down to 17.8%, reflecting the direct role of food security and rural livelihoods in welfare gains, particularly in low-income economies where agriculture remains the main employer. The Demographics and Health scenario reduces poverty to 18.2%, emphasising how improvements in health outcomes and lower dependency ratios support household resilience. The Manufacturing scenario achieves 18.3%, highlighting the role of industrialisation in creating employment, but also revealing that industrial gains take longer to diffuse into household incomes. The Financial Flows and Large Infrastructure and Leapfrogging scenarios deliver smaller reductions, 18.4% and 18.6%, respectively, showing that while capital inflows, connectivity and energy access are enablers, they require strong institutional and social policy linkages to translate into pro-poor growth.

Differences across income groups further explain the variation in outcomes. In low-income countries, poverty remains stubbornly high due to weak structural transformation, limited fiscal space and high dependency on subsistence agriculture; here, the AfCFTA scenario has the greatest impact by creating access to new regional markets and diversifying economic opportunities. In lower-middle-income countries, the Education scenario proves most effective, reflecting the catalytic role of skills development and vocational training in unlocking youth employment potential. For upper-middle-income countries, gains are more incremental, since poverty levels are already lower; here, governance reforms and industrial upgrading provide the strongest levers for further progress.

Overall, the analysis demonstrates that while all scenarios deliver improvements relative to the Current Path, governance and AfCFTA stand out as the most transformative levers for poverty reduction. Effective governance ensures that growth is inclusive and equitably distributed, while AfCFTA expands the scale of opportunities available to households, particularly in low- and lower-middle-income countries. Without progress in these two areas, sectoral interventions risk delivering only modest poverty reduction in the face of Africa’s demographic and structural pressures.

Chart 31 presents GDP in the Current Path and in the Combined scenario, from 2020 to 2043. The data is in US$ 2017 and at market exchange rates.

The Combined scenario consists of the combination of all eight sectoral scenarios, namely Governance, Demographics and Health, Education, Large Infrastructure and Leapfrogging, Agriculture, Manufacturing, AfCFTA and Financial Flows.

On the Current Path, Africa’s GDP (MER) will expand from US$2.66 trillion in 2023 to US$6.36 trillion by 2043, translating to an average annual growth rate of about 4.6%. This growth reflects incremental progress in investment, consumption and exports. Still, it remains insufficient to achieve the scale of transformation outlined in the AU’s Agenda 2063 and the SDGs, both of which call for accelerated structural change, job creation and resilience in the face of climate and demographic pressures. Compared to South Asia, which is expected to maintain higher average growth driven by rapid industrialisation and human capital improvements, Africa’s trajectory on the Current Path highlights both progress and its limitations.

The Combined scenario, by contrast, envisions the coordinated and effective implementation of interventions across multiple development pillars. In this integrated framework, reforms are not pursued in isolation but reinforce one another, generating compounding productivity and efficiency gains. Under this scenario, Africa’s average annual GDP growth accelerates to 6.2%, a level comparable to the growth surges that lifted parts of East and South Asia into middle- and high-income status.

As a result, Africa’s GDP (MER) rises to US$8.87 trillion by 2043, approximately US$2.51 trillion higher than the Current Path forecast. This substantial differential illustrates the synergistic effect of multi-sector reform, where strategic alignment in policy implementation magnifies development outcomes far beyond what incremental, sector-specific improvements can achieve. The scenario also reflects Africa’s growing capacity to harness the opportunities of regional integration through AfCFTA, while mobilising both domestic and international capital more effectively under stronger governance and institutional conditions.

The gains from the Combined scenario vary across income groups but are universally positive. Low-income countries record the most dramatic acceleration, with average annual GDP growth rising to 8.3% by 2043, around two percentage points higher than their Current Path forecast. This surge reflects the transformative potential of combining agricultural modernisation, demographic transition and structural diversification. Lower-middle-income countries also benefit strongly, with growth averaging 6.4%, a 1.7 percentage point increase relative to the Current Path. These economies gain most from industrialisation, trade integration and human capital improvements. Upper-middle-income countries, while already more structurally diversified, still see their growth rise to 4.3% by 2043, also 1.7 percentage points above baseline, reflecting the continued benefits of governance reforms, advanced services and infrastructure-led competitiveness.

The Combined scenario demonstrates that Africa’s growth ceiling is far higher than Current Path forecasts suggest, provided reforms are integrated, sequenced and sustained. The policy challenge is therefore not only about designing effective interventions within single sectors, but about ensuring cross-sector alignment, where progress in education and health feeds into productivity gains, infrastructure complements industrial growth and governance improvements amplify investment returns. If realised, this trajectory could place Africa firmly on the path to sustained prosperity, helping the continent escape the middle-income trap, achieve broad-based poverty reduction and fulfil the aspirations of Agenda 2063.

Chart 32 presents GDP per capita in purchasing power parity (PPP) in the Current Path and the Combined scenario. The data is from 2020 with a forecast to 2043.

While Africa’s aggregate GDP expands strongly under the Combined scenario, its most important impact is seen in per capita incomes, which provide a clearer measure of improving living standards. By 2043, Africa’s GDP per capita (PPP) would reach US$8 040, about US$1 830 higher than the Current Path forecast of US$6 210. This uplift represents not just faster economic growth, but the cumulative effect of coordinated reforms in governance, education, health, trade, manufacturing, agriculture, infrastructure and financial mobilisation.

The distribution of gains across income groups highlights the broad-based benefits of an integrated reform agenda. Upper-middle-income countries, already at relatively higher levels, see GDP per capita rise from US$13 000 in 2023 to US$18 790 by 2043, compared with just US$14 870 under the Current Path. This suggests that stronger governance, institutional reforms and regional integration help consolidate higher incomes and sustain growth in economies at risk of the middle-income trap.

For lower-middle-income countries, GDP per capita climbs from US$5 880 in 2023 to US$9 980 by 2043, a significant increase over the US$7 800 projected under the baseline. Here, the gains reflect the combined impact of industrialisation, human capital improvements and market integration, which create opportunities for large, youthful populations.

The largest relative improvement is seen in low-income countries, where GDP per capita more than doubles from US$1 850 in 2023 to US$4 060 by 2043, compared with only US$3 060 under the Current Path. These outcomes show how reforms in agriculture, education and demographic-health transitions can unlock transformative welfare gains in the continent’s most vulnerable economies.

The Combined scenario demonstrates that Africa’s long-term prosperity is achievable only through integrated, multi-sectoral reform. For upper-middle-income countries, the challenge is to avoid stagnation by deepening structural transformation and innovation. For lower-middle-income countries, the priority is accelerating industrialisation and trade integration to absorb large labour surpluses. For low-income countries, agricultural modernisation, basic infrastructure and human capital investment are critical to breaking cycles of poverty and dependency. In all cases, aligning these reforms with Agenda 2063 and the SDGs will be essential to translating aggregate growth into meaningful improvements in living standards.

Chart 33 presents the value added by sector in the Current Path and in the Combined scenario, from 2023 to 2043. The data is in US$ 2017 and as a percentage of GDP.

The modelling provides forecasts in six economic sectors, namely agriculture, energy, materials (including mining), manufactures, services and ICTech.

Africa’s economic transformation is fundamentally about shifting the balance of value creation from low-productivity agriculture toward manufacturing and modern services. Under the Current Path, this transition remains incomplete, with agriculture continuing to employ most of the labour force, especially in low- and lower-middle-income countries, despite its declining share of GDP, and manufacturing showing only modest gains compared to the services sector. The Combined scenario, however, presents a more productivity-driven structural shift, where coordinated investments in governance, infrastructure, education, trade integration and industrial policy catalyse diversification and industrialisation.

By 2043, the ICT sector’s share of GDP rises by 1.12 percentage points above the Current Path, reaching approximately 6.3%. This reflects the digital transformation agenda sweeping across Africa, supported by initiatives like the Smart Africa Alliance and national broadband strategies accelerating connectivity and digital inclusion. Manufacturing and materials also expand their GDP shares by 0.37 and 0.25 percentage points to reach 16.66% and 7.64%, respectively, signalling stronger industrial linkages and greater domestic value addition in sectors such as agro-processing, mineral beneficiation and light manufacturing. In contrast, agriculture and services contract marginally in proportional terms, not because they decline in absolute size, but because productivity in higher-value sectors grows faster.

The structural transformation pattern differs across income groups. Upper-middle-income African countries experience larger marginal gains in manufacturing, reflecting their stronger industrial bases, better infrastructure and greater integration into global value chains. Lower-middle-income countries follow the continental pattern, with balanced gains across ICT, manufacturing and materials. However, low-income countries record positive marginal gains only in ICT and materials, while agriculture remains structurally dominant in employment but less dynamic in terms of value-added growth. This divergence highlights the risk of a two-speed Africa, where some economies progress toward high-income structural transformation while others risk being left behind.

Despite proportional shifts, absolute output expands across all sectors under the Combined scenario, underscoring the positive spillover effects of technological upgrading and industrial dynamism. By 2043, the services sector remains the largest contributor in absolute terms, adding US$1.38 trillion more than in the Current Path. Manufacturing follows with an additional US$442.7 billion, ICT with US$230.6 billion, materials with US$207.9 billion, energy with US$139.2 billion and agriculture with US$110.1 billion. These broad-based gains demonstrate that sectoral expansion is not a zero-sum game: as manufacturing and ICT expand, they create multiplier effects across logistics, finance, energy and agriculture, reinforcing the overall growth trajectory.

The Combined scenario aligns with the aspirations of Agenda 2063 and the AfCFTA industrialisation agenda, both of which emphasise structural transformation as the cornerstone of Africa’s journey toward high-income status. By expanding ICT and manufacturing while sustaining productivity gains in services and agriculture, Africa can not only raise incomes but also avoid the middle-income trap, where economies stagnate due to weak innovation and shallow industrial bases. The challenge, however, lies in ensuring that low-income countries are not locked into primary production. Targeted investments in education, skills training, SME support and regional value chains are therefore essential to ensure all income groups can participate in, and benefit from, Africa’s structural transformation.

Chart 34 presents the size of the informal sector in the Current Path and in the Combined scenario, from 2020 to 2043.

The informal sector has long functioned as a buffer for employment in Africa, especially in urban and peri-urban centres where formal job creation lags behind labour force growth. While it provides essential income-generating opportunities for millions, informality is typically associated with low productivity, limited access to social protection, weak regulatory oversight and heightened vulnerability to economic shocks. For many households, informal activities are a survival strategy rather than a pathway to upward mobility.

Under the Current Path, informality persists as a defining feature of Africa’s economies. The informal sector’s share of GDP remains above 24%, while informal employment accounts for over 53% of the labour force by 2043. This trajectory underscores persistent gaps in job creation within high-productivity sectors such as manufacturing, ICT and modern services. It also reflects the limited impact of current policies aimed at enterprise registration, tax compliance and SME financing, many of which have been fragmented or insufficiently enforced. Importantly, income group disparities remain stark: low-income countries are forecasted to retain the highest informality levels, while upper-middle-income countries see gradual declines, reflecting stronger formal labour markets and institutional capacity.

By contrast, the Combined scenario charts a more transformative pathway. Under this scenario, the informal sector’s share of GDP declines to 20.6% by 2043, while informal employment drops sharply to 40.1% of the labour force, a reduction of 13 percentage points compared to the Current Path. These improvements are the cumulative result of integrated reforms: education and skills development equip youth for formal jobs; governance reforms reduce bureaucratic and regulatory bottlenecks; financial deepening expands credit and insurance access for SMEs; and industrialisation and trade integration create higher-productivity opportunities that draw workers away from subsistence-level activities.

The informal employment trajectory aligns Africa more closely with the experiences of South America, where sustained industrialisation, export diversification, and targeted social policies gradually reduced informality. However, Africa’s larger demographic pressures, particularly its rapidly expanding youth population, mean that without comprehensive reform, informality risks becoming entrenched, perpetuating cycles of poverty and vulnerability.

For Africa to fully unlock the potential of the Combined scenario, policy priorities must focus on both the demand and supply sides of the labour market. On the demand side, this means scaling up investments in labour-intensive manufacturing, agro-processing and digital services that can absorb large numbers of workers. Regarding supply, reforms should target education, TVET and digital literacy to prepare the workforce for evolving job demands. Equally, governments must expand social protection floors to gradually integrate informal workers into contributory schemes, while simultaneously reducing barriers to SME registration and taxation. Aligning these reforms with Agenda 2063’s aspirations for inclusive growth and the SDG target of decent work for all (SDG 8) will ensure that Africa’s demographic and economic transitions deliver broad-based benefits.

Chart 35 presents poverty in the Current Path and the Combined scenario, 2020 to 2043

Unlike siloed interventions, the Combined scenario tackles both the drivers and consequences of poverty, delivering a transformative reduction in extreme deprivation. By 2043, the share of Africans living below the US$2.15/day poverty line falls to 10.9% of the population (about 241 million people). This outcome is 8.2 percentage points lower than the Current Path forecast and means that 199 million more people are lifted out of poverty than would otherwise be the case.

The benefits are particularly pronounced in low-income countries, where poverty reduction is most urgent. By 2043, about 120.5 million additional people will be lifted out of poverty compared with the Current Path forecast of 270.6 million people. This reflects the compounding impact of investments in health, education and agricultural productivity. Lower-middle-income countries also make substantial gains, with an extra 74.3 million people escaping poverty compared to the Current Path’s 154.1 million forecast. In upper-middle-income countries, where poverty rates are already lower, the gains are more modest but still meaningful: 3.9 million additional people lifted out of poverty relative to the 14.8 million forecast under the baseline.

The Combined scenario also demonstrates that reducing poverty is not only about raising incomes but also about tackling income inequality. Africa’s Gini coefficient, which stagnates at 0.40 between 2023 and 2043 under the Current Path, declines to 0.37 by 2043 under the Combined scenario. This improvement reflects the distributive effects of more inclusive growth, targeted social protection and wider access to education, health and productive assets.

Income inequality remains highest in upper-middle-income countries, where the Gini stagnates at 0.47 under the Current Path. However, under the Combined scenario, it declines to 0.45, reflecting better redistribution mechanisms and stronger labour market integration. Lower-middle- and low-income countries also see reductions of around 0.2 points, reinforcing the role of redistributive policies, inclusive industrialisation and expanded formal employment in narrowing inequality.

The Combined scenario highlights that poverty reduction in Africa requires growth and redistribution. Pro-poor policies, such as targeted cash transfers, universal health and education access and rural infrastructure, must complement macroeconomic reforms that drive industrialisation and job creation. Furthermore, tailoring poverty reduction strategies to income group contexts is critical: low-income countries require large-scale investments in basic services and agricultural productivity, while middle-income economies must focus on SME development, value chain integration and labour-intensive industrialisation. Aligning these strategies with Agenda 2063’s aspiration of “A prosperous Africa based on inclusive growth and sustainable development” and the SDGs will ensure that poverty reduction is embedded in Africa’s long-term transformation.

Chart 36 compares life expectancy in the Current Path with the Combined scenario from 2020 to 2043.

Life expectancy is a central measure of human development, reflecting not only the strength of healthcare systems but also the broader socio-economic and environmental conditions that shape well-being. In 2023, Africa’s life expectancy stood at 67.3 years, one of the lowest amongst global regions, compared to 71 years in South Asia and 77 years in South America. This gap highlights the combined effects of Africa’s high burden of communicable diseases, rising prevalence of NCDs, limited access to quality healthcare, persistent poverty and inadequate nutrition.

Under the Current Path, gradual progress is expected, with life expectancy forecasted to rise to 72.2 years by 2043. This trajectory reflects improvements in disease control (notably malaria and HIV/AIDS), better maternal and child health and modest investments in healthcare systems. However, it still falls short of the pace achieved in South Asia, where aggressive health system strengthening, education gains and targeted poverty reduction policies enabled a rapid rise in life expectancy.

The Combined Scenario, by contrast, forecasts a much stronger improvement, with life expectancy reaching 75.1 years by 2043, 2.9 years higher than the Current Path forecast. This outcome demonstrates the synergies created by cross-sectoral reforms. Expanded access to quality education contributes to better health literacy and maternal care, infrastructure investment improves water, sanitation and energy for health facilities, governance reforms reduce resource leakages and social equity measures expand access to essential health services. Together, these drivers create a healthier population that is less vulnerable to preventable deaths.

Improvements are evident across all income groups. Upper-middle-income countries maintain the highest life expectancy levels, consolidating gains through stronger healthcare systems and higher social spending. Still, the Combined scenario ensures that even low- and lower-middle-income countries make major gains, with all groups reaching above 74 years by 2043. This narrowing of gaps suggests progress toward a more equitable health transition across Africa’s diverse economies and the African Union’s Agenda 2063 life expectancy target of 75. Generally, the Combined scenario trajectory reflects the transformative effect of targeted interventions in health, nutrition and social protection, especially across the low-income and lower-middle-income countries.

Gender dynamics also follow global patterns, with women consistently outliving men. Under the Combined scenario, female life expectancy rises from 69.3 years in 2023 to 77.3 years by 2043, compared with 74.5 years under the Current Path. For men, life expectancy increases from 65.2 years in 2023 to 72.9 years, relative to 70 years under the Current Path. The persistence of the gender gap reflects both biological factors and social conditions. Still, the fact that men and women see notable gains illustrates the broad-based benefits of improved healthcare systems, safer environments and expanded access to essential services.

The rise in life expectancy under the Combined scenario demonstrates that health outcomes cannot be divorced from multi-sectoral progress. Beyond strengthening healthcare systems, gains depend on investments in education, clean water, sanitation, nutrition, energy access and poverty reduction. Governance improvements and reduced inequality also contribute by ensuring that resources are better allocated and services are more evenly distributed. These advances align directly with Agenda 2063’s Aspiration 1 for a healthy and well-nourished Africa and SDG 3 (Good Health and Well-being).

Chart 37 compares carbon emissions in the Current Path with the Combined scenario from 2020 to 2043.

Africa’s carbon profile is shaped by its dual status as the least industrialised region and one of the most climate-vulnerable. Despite being home to nearly 18% of the world’s population, the continent consumes just 6% of global energy and contributes less than 3% of global energy-related CO₂ emissions. On a per-capita basis, Africa emits about 1 tonne of CO₂ annually, compared to 2.5 tonnes in South America and 4-5 tonnes in Asia. This disparity highlights Africa’s historic underdevelopment and its potential to pursue a low-carbon development pathway that balances industrialisation with climate goals, as well as its vulnerability to climate change impacts driven largely by other regions.

Under the Current Path, Africa’s carbon emissions from fossil fuels will grow from 432 million tons in 2023 to about 790 million tons by 2043. While this marks a steady increase, Africa’s per capita emissions will remain far below global averages. For comparison, Africa’s total emissions are lower than those of South Asia, despite South Asia’s larger population, and slightly higher than South America, which has already reached higher levels of industrialisation. This gap underscores Africa’s potential to industrialise without replicating the high-carbon trajectories of peer regions.

The Combined scenario forecasts that emissions will rise slightly faster, reaching 828 million tons by 2043, or 38 million tons higher than the baseline forecast. These additional emissions largely stem from accelerated industrialisation and expanded energy access, particularly in low-income and lower-middle-income countries, where emissions rise by 13 million and 29 million tons above their baseline forecasts, respectively. In contrast, upper-middle-income countries reduce their emissions by 4 million tons relative to the Current Path, reflecting earlier adoption of renewables, efficiency gains and clean technology.

By 2043, lower-middle-income countries will be Africa’s largest emitters, driven by rapid urbanisation, expanding manufacturing bases and rising household energy demand. This contrasts with upper-middle-income economies, which achieve relative decoupling of growth and emissions through renewable adoption, and with low-income economies, where energy poverty still limits emissions despite population growth.

The Combined scenario illustrates the trade-off between growth and emissions: industrialisation and energy access expand, but emissions also rise. However, Africa’s absolute contribution to global emissions remains modest, and its per capita emissions will still be among the lowest worldwide, reinforcing the continent’s case for climate justice in global negotiations.

Meeting development and climate goals will require Africa to double or triple its annual energy buildout, scaling renewable energy, mini-grids and regional power pools under initiatives like the AfSEM and the PIDA. Complementary policies, such as carbon pricing, efficiency standards and targeted support for green manufacturing, can ensure that emissions growth remains aligned with Agenda 2063’s aspirations for sustainable industrialisation and SDG 13 on climate action. If implemented effectively, these measures would allow Africa to sustain rapid growth while positioning itself as a leader in green industrialisation, avoiding the high-emission traps experienced by other regions during their development.

Chart 38 compares energy production from 2020 to 2043 in the Current Path with the Combined scenario in nine types, namely oil, gas, coal, hydro, nuclear, solar, wind, geothermal and other renewables. The data is converted into billion barrels of oil equivalent (BOE) to allow for comparisons between different sources. Note that energy production could be for domestic use or export.

Energy production remains one of Africa’s most pressing development bottlenecks, with far-reaching implications for industrialisation, trade competitiveness and inclusive growth. Despite being richly endowed with fossil fuel reserves and world-class renewable potential, Africa continues to face structural deficits in energy supply, particularly in low- and lower-middle-income countries. This energy gap is a key factor constraining progress toward the African Union’s Agenda 2063 targets, which prioritise universal access to affordable, reliable and sustainable energy as a cornerstone for economic transformation.

Under the Current Path, Africa’s total energy production will grow from 5.67 billion barrels of oil equivalent (BOE) in 2023 to 7.66 billion BOE by 2043. The production mix remains dominated by fossil fuels, particularly oil, natural gas and coal, with relatively modest growth in renewables. This trajectory leaves the continent vulnerable to global energy price volatility and carbon lock-in, while also failing to meet the rapidly growing demand from industrialisation, digitalisation and urbanisation.

The Combined scenario envisions a more ambitious energy transformation. By 2043, Africa’s energy production rises to 10.02 billion BOE, which is 2.36 billion BOE higher than the Current Path forecast. The bulk of this expansion is driven by renewables, with solar energy emerging as the dominant contributor. Solar alone accounts for nearly half of the additional production (45%, or 1.07 billion BOE) by 2043. Solar energy production rises dramatically from 23.4 million BOE in 2023 to 1.79 billion BOE by 2043 under the Combined scenario, compared to only 722 million BOE under the Current Path. This trajectory reflects Africa’s unparalleled solar potential, which is estimated at more than 60% of the world’s best solar resources.

Wind energy also significantly contributes, expanding from 19.4 million BOE in 2023 to 410 million BOE by 2043 under the Combined scenario, compared with 293 million BOE under the Current Path. This growth is supported by emerging initiatives in wind mapping, regional wind corridors such as in North and East Africa, hybrid energy systems and targeted deployment in remote zones with favourable conditions. Solar and wind illustrate how Africa could leapfrog traditional energy pathways and build a renewable-heavy generation mix that meets demand and aligns with global climate goals.

Even with this rapid expansion, energy demand will outpace domestic production by the early 2030s. Under the Current Path, the continent shifts from a production surplus of 1.01 billion BOE in 2023 to a deficit of 1.91 billion BOE by 2043. The Combined scenario narrows but does not eliminate this gap: by 2043, Africa still faces a deficit of 1.3 billion BOE, highlighting the scale of the challenge posed by industrialisation, digital infrastructure expansion, population growth and rising household consumption.

The deficit is most acute in low- and lower-middle-income countries. In lower-middle-income countries, the energy balance flips from a surplus of 310 million BOE in 2023 to a deficit of 1.62 billion BOE by 2043 under the Combined scenario, an improvement on the 1.84 billion BOE deficit forecasted under the Current Path, but still a substantial shortfall. In low-income countries, the deficit expands from approximately 100 million BOE in 2023 to 760 million BOE by 2043 under the Combined scenario, slightly better than the 790 million BOE deficit forecasted under the Current Path. By contrast, upper-middle-income countries maintain an energy surplus. Under the Combined scenario, their surplus expands from 790 million BOE in 2023 to 1.12 billion BOE by 2043, whereas under the Current Path, it will decline to approximately 740 million BOE. This divergence reflects differences in energy mix, investment capacity and industrial structure, with upper-middle-income economies better positioned to scale renewables and manage demand growth.

Africa’s energy challenge stems not from a lack of resources but from financing shortfalls, weak transmission infrastructure and fragmented policy frameworks. The Combined scenario underscores both the opportunities and the constraints of the continent’s energy transition. Renewables, particularly solar and wind, have the potential to drive a historic shift in supply, yet without massive and sustained investment in generation, storage, transmission and distribution, rising demand will continue to outpace production. Continental initiatives such as the AfSEM, the PIDA and the AfDB’s New Deal on Energy for Africa provide the strategic scaffolding for scaling renewable investment and enabling cross-border power trade. However, to align with Agenda 2063 and SDG 7 (universal access to clean energy by 2030), Africa must double or triple its renewable buildout, mobilise blended finance for energy infrastructure and mainstream decentralised off-grid solutions for rural electrification. Without such steps, the continent risks deepening its production–demand deficit, which would constrain industrialisation, slow digitalisation and reinforce inequities in energy access across income groups.

Chart 39 summarises the policy recommendations for Africa.

Africa stands at a critical stage of its development trajectory. With its population forecasted to rise from 1.5 billion in 2024 to 2.3 billion by 2043 under the Current Path, the continent faces the dual challenge of scaling services and infrastructure while creating millions of jobs for a fast-growing youth population. Moreover, Africa’s GDP (MER) is set to grow to US$6.36 trillion by 2043, with GDP per capita reaching US$6 210, but nearly one-fifth (19.1%) of Africans would remain trapped in extreme poverty (living under US$2.15/day). Structural transformation remains incomplete, with low-value services dominating output while agriculture and informal employment still absorb the majority of labour. The scenarios examined in this report demonstrate that coordinated reforms across trade through AfCFTA, governance, agriculture, education, manufacturing, financial flows, large infrastructure, as well as health and demographics can robustly enhance Africa’s prospects, lifting GDP to nearly US$9 trillion, rising GDP per capita to about US$8 040, reducing extreme poverty to 10.9% and raising life expectancy above 75 years by 2043.

The analysis shows that Africa’s baseline trajectory delivers steady but insufficient progress, falling short of the transformative aspirations set out in Agenda 2063 and the SDGs. Incremental reforms, while helpful, will not unlock the demographic dividend nor shield the continent from intensifying climate risks, conflict dynamics and volatility in global markets. More decisive action is required. Among the scenarios examined, trade integration under the AfCFTA and institutional strengthening through better governance emerge as the most transformative, offering the strongest potential to expand markets, reduce poverty and raise incomes. Education and manufacturing provide critical complementary drivers, equipping young people with skills while creating jobs in higher-productivity sectors. Infrastructure investment and digital leapfrogging are essential enablers of these shifts, from powering industrial corridors to expanding broadband connectivity. The Combined scenario demonstrates that the whole is far greater than the sum of its parts: when the interventions in the eight scenarios are pursued coherently, cross-sectoral reforms multiply gains, accelerating Africa’s convergence with peer regions.

Realising this vision requires ambitious but concrete policy action. Africa must deepen regional integration by fully implementing AfCFTA protocols, harmonising standards and investing in cross-border transport and energy corridors that reduce trade costs and unlock regional value chains. Stronger governance is essential, with countries needing to tackle corruption, strengthen the rule of law and professionalise public administration to improve fiscal efficiency and build investor confidence. Human capital investments must accelerate, with universal access to quality education and vocational training tailored to the needs of labour markets, particularly in STEM and digital skills, complemented by universal health coverage and child- and maternal-health interventions that extend life expectancy. Industrialisation strategies should prioritise agro-processing, light manufacturing and mineral beneficiation, supported by SME financing and targeted infrastructure to reduce dependence on raw commodity exports. Financial flows need to be mobilised more effectively, through deeper capital markets, diaspora bonds and blended finance instruments, alongside stronger measures to curb illicit financial flows and expand tax revenues. At the same time, Africa must fast-track its energy transition by doubling or tripling its annual energy buildout, scaling renewables, off-grid and mini-grid solutions, and regional power pools like the ASEM to achieve universal access and underpin industrial growth while pursuing a low-carbon growth model.

Finally, inclusive development demands that poverty reduction and equity remain at the centre of this agenda. Expanding social protection, child-focused programs and climate adaptation measures, especially in fragile and low-income countries, will be critical to breaking intergenerational poverty traps and ensuring that growth is broadly shared.

If these interventions are effectively implemented, Africa will not simply catch up with its peers; it has the chance to lead. With the world’s largest concentration of solar potential, the fastest-growing workforce and vast natural resources, Africa could become the frontline of green industrialisation and inclusive growth. A continent that today contributes less than 3% of global CO₂ emissions could demonstrate how to power rapid economic transformation without replicating the high-carbon, high-inequality pathways of the past. The choice is stark: remain locked in a cycle of modest progress and persistent vulnerability, or seize this historic demographic and resource-driven moment to transform the continent’s future. With vision, political will and coordinated reform, Africa can emerge not as a follower, but as a global leader in shaping a sustainable, equitable and prosperous 21st-century economy.