Economic growth recovery in sub-Saharan Africa (SSA) has remained modest, as it is projected to pick up to 2.4 percent in 2017 from 1.3 percent in 2016, according to the new Africa’s Pulse report by the World Bank.
This falls below the forecast of 2.6 percent made earlier in April this year.
This pace of growth remains below population growth, making it difficult for countries to make a significant dent in poverty unless greater efforts are undertaken to increase efficiency of investment and to pursue new drivers of sustainable growth.
According to the Banks’ Chief Economist for Africa, Alberta Zeufack, “recovery is weak in several key dimensions, notably, low investment growth and falling productivity growth.”
Zeufack noted that, “this calls for more sweeping structural reforms that can help ensure that economic growth is anchored on a strong footing.”
The rebound of the continents growth, is led by its largest economies, Nigeria and South Africa.
In the second quarter of this year, Nigeria pulled out of a five-quarter recession and South Africa emerged from two consecutive quarters of negative growth.
Improving global conditions, including rising energy and metals prices and increased capital inflows, have helped support the recovery in regional growth. However, the report warns that the pace of the recovery remains sluggish and will be insufficient to lift per capita income in 2017.
“Most countries do not have significant wiggle room when it comes to having enough fiscal space to cope with economic volatility,” Zeufack observed.
He advised, “it is imperative that countries adopt appropriate fiscal policies and structural measures now to strengthen economic resilience, boost productivity, increase investment, and promote economic diversification.”
Growth continues to be multispeed across the region, where in non-resource intensive countries such as Ethiopia and Senegal, growth remains broadly stable supported by infrastructure investments and increased crop production.
However, across the region additional efforts are need to address revenue shortfalls and contain spending to improve fiscal balances.
SSA is projected to see a moderate growth increase in activity, with growth rising to 3.2 percent in 2018 and 3.5 percent in 2019, as commodity prices firm and domestic demand gradually gains ground, aided by slowing inflation and monetary policy easing.
The World Bank lead Economist and lead author of the report, Punam Chuhan-Pole stated that, “the outlook for the region remains challenging as economic growth remains well below the pre-crisis average of 5.6 percent.”
“Moreover, the moderate pace of growth will only yield slow gains in per capita income that will not be enough to harness broad-based prosperity and accelerate poverty reduction,” she added.
The economic expansion in the West Africa Economic and Monetary Union (WAEMU) countries is expected to proceed at a strong pace on the back of solid public investment growth, led by Cote D’Ivoire and Senegal.
Elsewhere, growth is projected to firm in Tanzania on a rebound in investment growth and recover in Kenya, as inflation eases.
Ethiopia is noted to likely remain the fastest-growing economy in the region, despite public investment being expected to slow down.
By Joshua W. Amlanu