Recent reports from the International Monetary Fund (IMF) and FSD Africa highlight a promising yet challenging economic future for Africa. The IMF raised its economic growth forecast for sub-Saharan Africa to 4.2% by 2025, marking the highest rate since 2021. Alongside this, a report by FSD Africa and Shortlist projects that Africa’s green economy could generate up to 3.3 million direct jobs by 2030. Together, these reports underscore opportunities for expansion but also reveal the significant challenges that must be addressed to ensure inclusive and sustainable growth.

The IMF’s revised forecast reflects confidence in Africa’s potential, buoyed by a recovery in commodity prices, post-pandemic economic rebound, and technological advances in sectors like telecommunications. Yet, the IMF also highlights potential risks that could undermine growth, such as social unrest and the urgent need to create 15 million jobs annually to accommodate Africa’s fast-growing workforce. High youth unemployment and structural inequalities threaten to limit the benefits of growth for broader society if left unaddressed.

Meanwhile, the FSD Africa report focuses on the green economy as a vital sector for job creation and resilience-building in Africa. Given the continent’s susceptibility to climate change, Africa’s green economy is not just about environmental sustainability; it’s about economic survival. Key sectors in the green economy, such as solar energy, electric vehicles, and climate-smart agriculture, present crucial employment opportunities and support Africa’s environmental goals. The report estimates that more than $100 billion in annual funding is needed to realise this potential, covering everything from workforce training to infrastructure and regulatory reform.

These reports highlight a central point: Africa’s growth will only be sustainable if it aligns with the continent’s social and environmental priorities. The green economy offers a path to address these dual challenges, but building it requires the concerted effort of governments, private investors, and international organisations to invest in infrastructure, skills, and supportive policies that can foster a resilient economic environment.

The IMF’s 4.2% forecasted growth rate is encouraging but signals a clear need for structural reforms to ensure that this growth benefits everyone. African nations need to pursue inclusive growth strategies, investing in education — particularly in vocational and technical training — to equip people with skills for a modern, green economy. With the potential for 3.3 million new jobs in the green economy, Africa must bridge its skills gap, preparing young Africans for emerging fields in renewable energy, environmental science, and sustainable agriculture. Investing in education reform is therefore essential to maximising the employment opportunities that the green economy promises.

FSD Africa’s report on the green economy is a timely reminder that Africa cannot afford to pursue growth at the expense of its environment. Climate change already poses a severe risk to African economies, with extreme weather affecting agriculture, water supply, and overall stability. Climate-smart agricultural practices are essential to ensure food security and protect smallholder farmers from climate impacts. Adopting sustainable practices and developing green industries will allow Africa to reduce its vulnerability to climate shocks, creating an economy that is more resilient and sustainable.

Transitioning to a green economy, however, is a complex undertaking that requires more than just policy aspirations. FSD Africa emphasises that substantial investment is necessary to build the infrastructure required, from renewable energy grids to efficient transportation networks. Access to financing remains a major hurdle, as many African countries are burdened by high debt and limited access to capital markets. The report calls for $100 billion in annual funding, which must come from a combination of domestic resources, foreign direct investment, and international assistance. Innovative financing models, such as green bonds and blended finance, could help mobilise resources for sustainable projects.

For this green transition to succeed, African governments must create regulatory environments that encourage investment in sustainable sectors. This includes policies that provide incentives for renewable energy projects, reduce bureaucratic barriers, and protect investor rights. Transparency and corruption reduction are essential to building investor confidence, and stable regulatory frameworks can attract both local and international investors. By fostering a conducive investment climate, African countries can support the growth of a vibrant green economy.

The private sector also has a vital role in Africa’s green transition. Companies across the continent are investing in clean energy and sustainable practices, with many adopting corporate social responsibilities as part of their business model. Businesses can support the green economy by developing products and services aligned with sustainable development goals, such as solar-powered home systems, energy-efficient appliances, and eco-friendly transportation solutions. Growth in green industries not only creates jobs but also stimulates demand for locally produced goods, contributing to economic diversification and reducing reliance on imports.

In conclusion, the IMF and FSD Africa reports collectively underscore both the potential and the challenges of Africa’s economic future. While traditional sectors are expected to drive a 4.2% growth rate by 2025, the green economy offers a powerful engine for sustainable development. By investing in renewable energy, climate-smart agriculture, and sustainable transportation, Africa can create millions of jobs, strengthen resilience to climate change, and foster long-term economic stability. Realising this vision, however, requires substantial financial investment, supportive policies, and a commitment to inclusive growth.

Africa stands at a pivotal moment where it has the opportunity to redefine its growth trajectory. The green economy provides a transformative path that addresses social and environmental challenges while laying the foundation for a prosperous future. With strategic investments and strong leadership, Africa can build an economy that not only grows but thrives, securing a resilient and sustainable future for generations to come.

The author is an applied economist.