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From Amechi Ogbonna, Washington DC, USA
The World Bank has advocated more infrastructure investment in the African region, including urgent implementation of reforms to improve institutions that foster private sector growth, develop local capital markets in the effort to sustain growth in their respective economies.
The advice became imperative as Africa’s Pulse, a biannual analysis of the state of African economies conducted by the World Bank and released at the ongoing Spring Meetings of the IMF and the World Bank in Washington DC, also underscored the need for governments in the region to improve infrastructure and strengthen domestic resource mobilisation.
The study showed that economic growth in sub-Saharan Africa would rebound in 2017 after registering the worst decline in more than two decades in 2016, but would require massive investment in facilities that would promote growth and development in the region.
According to the study, the African continent is showing signs of recovery, with growth projected to reach 2.6 per cent in 2017, even as it noted that economic recovery remains weak, with growth expected to rise only slightly above population growth, a pace that hampers efforts to boost employment and reduce poverty.
The study also showed that Nigeria, South Africa, and Angola, the continent’s largest economies, are seeing a rebound from the sharp slowdown in 2016, but the recovery has been slow due to insufficient adjustments to low commodity prices and policy uncertainty. This was coming as several oil exporters in the Central African Economic and Monetary Community (CEMAC) are said to be facing economic difficulties arising from low commodity prices and social challenges.
The World Bank’s latest data also revealed that seven countries including Côte d’Ivoire, Ethiopia, Kenya, Mali, Rwanda, Senegal, and Tanzania have continued to show economic resilience, bolstered by domestic demand, posting annual growth rates above 5.4 per cent in 2015-2017. These countries house nearly 27 per cent of the region’s population and account for 13 per cent of the region’s total GDP. The global economic outlook is improving and should support the recovery in the region.
Africa’s Pulse notes that the continent’s aggregate growth is expected to rise to 3.2 per cent in 2018 and 3.5 per cent in 2019, reflecting a recovery in the largest economies although growth for oil exporters will remain subdued, while metal exporters are projected to see a moderate uptick. The report noted that GDP growth in countries whose economies depend less on extractive commodities should remain robust, underpinned by infrastructure investments, resilient services sectors, and the recovery of agricultural production. This is especially the case for Ethiopia, Senegal and Tanzania.
A stronger-than-expected tightening of global financing conditions, weaker improvements in commodity prices, and a rise in protectionist sentiment represent downside external risks to the outlook. On the domestic front, risks to the current recovery stem from an inadequate pace of reforms, rising security threats, and political volatility ahead of elections in some countries.
“As countries move towards fiscal adjustment, we need to protect the right conditions for investment so that sub-Saharan African countries achieve a more robust recovery,” says Albert G. Zeufack, World Bank Chief Economist for the Africa Region. “We need to implement reforms that increase the productivity of African workers and create a stable macroeconomic environment. Better and more productive jobs are instrumental to tackling poverty on the continent.”
The environment of weak economic growth comes at a time when the continent is in dire need of necessary reforms to boost investment and tackle poverty. Countries also have to undertake much-needed development spending while avoiding increasing debt to unsustainable levels.