Sub-Saharan Africa entered 2026 benefiting from significant progress made in restoring macroeconomic stability after a strong economic performance in 2025.
Economic activity expanded broadly across countries and sectors, with regional growth reaching close to 4.5 percent—the fastest pace in a decade—driven by sound policy measures, particularly in some of the region’s largest economies.
Inflation declined by the end of 2025, supported by falling global food and fuel prices, reduced exchange rate pressures, and tighter monetary policies implemented in many countries.
The International Monetary Fund notes that fiscal positions have also improved, backed by stronger economic growth and favorable exchange rate movements.
However, the conflict in the Middle East has clouded the outlook.
Prices of oil, gas, and fertilizers, as well as transportation costs, have risen sharply.
In addition, the conflict has disrupted trade with Gulf countries, reduced tourism flows, and may lead to a decline in remittances.
Investor confidence has weakened, affecting access to financing, while many countries lack sufficient buffers to absorb shocks.
The IMF projects that economic growth in Sub-Saharan Africa will reach 4.3 percent in 2026—0.3 percentage points lower than pre-conflict expectations—with significant variation across countries.
Oil-importing countries without strong natural resource bases are expected to face trade disruptions and rising living costs, while oil-exporting countries may benefit from increased export revenues but remain vulnerable to market volatility and cyclical economic conditions.
Inflation is projected to rise to 5.0 percent by the end of 2026, up from 3.4 percent at the end of 2025.
Poverty, food insecurity, and other social indicators—already strained by the effects of COVID-19—are facing new challenges due to declining external aid and rising food prices.
IMF staff estimate that a 20 percent increase in global food prices could push more than 20 million people in the region into severe food insecurity.
The risks remain substantial, given global economic uncertainty and the region’s structural vulnerabilities.
If the conflict persists, rising prices for oil, fertilizers, and food could continue, potentially driving investors away, increasing borrowing costs, and forcing highly indebted countries to take swift and difficult policy actions.
Under such a scenario, regional economic output could decline by 0.6 percent, particularly among oil-importing countries, while inflation could increase by an additional 2.4 percentage points in 2026 compared to pre-conflict projections.
The IMF urges Sub-Saharan African countries to implement policies that address immediate challenges while building long-term resilience.
In the short term, priority should be given to controlling inflation and protecting vulnerable populations through targeted and time-bound support measures.
Oil-exporting countries are encouraged to strengthen their fiscal buffers, while oil-importing countries should prioritize spending on social protection and development, alongside efforts to increase domestic revenue.
Governments are also advised to manage public finances prudently and continue improving fiscal governance.
Countries should accelerate structural reforms to achieve sustainable growth and diversify their economies.
Regional cooperation across Sub-Saharan Africa could further enhance growth and strengthen resilience against supply chain disruptions in an increasingly uncertain global political and economic environment.
The IMF also highlights that developing domestic financial markets could help mobilize more local resources, alongside leveraging artificial intelligence (AI) to boost productivity.
This will require expanding access to reliable electricity, investing in digital infrastructure, workforce skills, cybersecurity, and effective data governance.
KIGALI TIMES