The IMF has highlighted that approximately 90% of African Union economies need to enhance tax revenue collection and implement structural reforms to sustain growth.
The IMF disclosed this in its “G20 Report on Strong, Sustainable, Balanced, and Inclusive Growth,” released in November 2024.
The IMF report projects that economic activity in the African Union will accelerate, with growth rising from 3.3% in 2023 to 4.4% in 2029, returning to pre-pandemic average levels observed between 2000 and 2019.
For the African Union (AU), which includes Nigeria, the IMF emphasized that reforms in fiscal policies, governance, and education and skills development are the top priorities.
For the African Union (AU), which includes Nigeria, the IMF highlighted that reforms in fiscal policies, governance, and education and skills development are critical priorities.
The report noted that governance reform needs are particularly urgent in about three-quarters of AU economies.
These reforms focus on strengthening the rule of law, combating corruption, improving public financial management (PFM), enhancing anti-money laundering and countering the financing of terrorism (AML/CFT) frameworks, and increasing transparency, efficiency, and accountability in government and state-owned enterprises.
“Almost 90 per cent of AU economies require high-priority reforms of fiscal policy, including mobilizing greater tax revenues, controlling public spending, and enhancing transparency, while also maintaining essential social spending.
“For about half of AU countries, high priority is also assigned to reforms aimed at improving education and skills, with frequent references to the need to increase the quality and access to primary, secondary, and tertiary education, reduce skill mismatches, and bolster skills and vocational training.
“For about 40 per cent of AU countries also, reforms to business regulation, credit markets, and the green sector are assigned high importance,” the report noted.
In a statement on its website on November 21, 2024, the IMF projected more robust growth across the African Union (AU), which joined the G20 last year.
However, the IMF emphasized that the continent’s rapidly growing populations require AU economies to create jobs for millions of young people entering the labor market, highlighting the critical need for inclusive and employment-focused growth strategies.
“In addition, frontier markets in Africa are still grappling with high borrowing costs, despite some moderation in spreads so far in 2024, and some emerging markets may have trouble refinancing debt maturing on the horizon at sustainable interest rates, as borrowing costs have become sensitive to countries fiscal buffers,” the report added.
Nigeria’s economy grew by 2.98% in the first quarter and 3.19% in the second quarter of 2024, outperforming the growth rates recorded in 2023.
This reflects resilience despite significant macroeconomic challenges, including surging inflation, a sharp depreciation of the naira, spiking gasoline prices, and inflation reaching a 28-year high.