(Ecofin Agency) - In its latest outlook, the International Monetary Fund (IMF) projects that by 2025, sub-Saharan Africa could see per capita consumption equivalent to $15 per day, adjusted for purchasing power parity (PPP). Despite this positive trend, widespread income inequality and capital flight are expected to limit the impact of this economic growth on local populations. The 2025 GDP per capita estimate of $5,533 (PPP) significantly improved from the previous $5,161.6 forecast in April 2024, highlighting the region's steady annual progress since 2017.

The $15 per day, adjusted for purchasing power, indicates what an average person in the region could theoretically consume. PPP allows a comparison of this amount with spending power in the United States or other reference economies by considering living costs in each country. This figure contrasts sharply with the common view of sub-Saharan Africa, where a large portion of the population lives on less than $2 per day. However, it is crucial to recognize that this figure is an average. Wealth distribution remains uneven, leaving many without tangible benefits from this economic progress.

Wealth Distribution Still a Barrier to Inclusive Development

While the absolute rise in average purchasing power per capita is a positive sign, wealth distribution remains a critical hurdle. Sub-Saharan Africa’s economic structure, marked by a predominance of foreign investments in key sectors and an unequal tax system, limits the benefits for local populations.

Foreign investments, particularly outside South Africa, dominate the region, especially in mining, oil, and infrastructure. Multinational corporations repatriate a large share of profits, reducing the portion of wealth retained as national income. This capital flight hampers local wealth accumulation and restricts government funds for social programs and infrastructure.

In addition, tax mechanisms like VAT and excise duties disproportionately burden low-income households, reducing their real purchasing power and widening economic inequality. Studies indicate these regressive taxes pose extra hurdles for vulnerable populations, who see little gain from regional economic growth.

Agricultural Vulnerability Fuels Inequality

Another factor behind the uneven wealth distribution is the region’s economic structure. Roughly 56% of sub-Saharan Africa’s workforce is in agriculture, a sector with limited wealth generation. Most agricultural activity involves subsistence farming, providing minimal direct income for producers. Moreover, the international market prices for cash crops like cocoa and coffee remain relatively low, further limiting farmers' earnings.

To address these challenges, local transformation is essential. Developing processing and storage infrastructure, along with improving logistics, could boost farmers' incomes and capture more wealth within the local economy.

Opportunities and Obstacles for Sustainable Growth

Despite progress, sub-Saharan Africa’s economic potential remains underutilized. Inadequate infrastructure, unreliable energy sources, and weak local value chains prevent the transformation of raw materials into finished products, slowing wealth accumulation in the region. However, the region still has financial flexibility. With a relatively low external debt rate (47% of GDP) and debt service estimated at $152 billion in 2025, sub-Saharan African countries can tap into international capital markets to finance large-scale projects, even at higher borrowing rates.

Additional funding, even under current market conditions, could support critical investments in infrastructure, especially in energy and logistics. This would strengthen local value chains, creating more wealth for the region's populations.

IMF and International Partners’ Role in Supporting Growth

Sub-Saharan African nations benefit from several IMF and donor programs to aid infrastructure and development projects while managing debt repayment. Though the economic transformation process is complex and faces short-term challenges, as seen in Nigeria, Kenya, and Senegal, it remains a vital lever for sustainable growth.

In conclusion, the IMF’s forecast for an average purchasing power of $15 per day by 2025 is an encouraging signal of sub-Saharan Africa’s potential. However, to ensure this growth truly benefits the population, inclusive wealth distribution policies, local infrastructure investment, and economic autonomy are essential. The goal remains to turn wealth creation into a driver for fair and sustainable development.