SILVER LINING Economic activity will pick up in metals exporting countries, as mining production and investment rise
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Sub-Saharan Africa’s growth is projected to reach 3.1% in 2018 and to average 3.6% in 2019/20, reports a biannual analysis of African economies conducted by the World Bank, Africa’s Pulse, which was released by the international finance organisation last week.
The growth forecasts are premised on expectations that oil and metals prices will remain stable, and that governments in the region will implement reforms to address macroeconomic imbalances and boost investment.
“Growth has rebounded in sub-Saharan Africa, but not fast enough. We are still far from pre-[financial] crisis growth levels,” said World Bank chief economist for the Africa region Albert Zeufack. He stressed that African governments had to speed up and deepen macroeconomic and structural reforms to achieve sustained levels of growth.
The report noted that the moderate pace of economic expansion reflected the gradual pick-up in growth in the region’s three largest economies, namely Nigeria, Angola and South Africa.
“Elsewhere, economic activity will pick up in some metals exporters, as mining production and investment rise. Among nonresource-intensive countries, solid growth, supported by infrastructure investment, will continue in the West African Economic and Monetary Union led by Côte d’Ivoire and Senegal.”
Further, the report noted that growth prospects had strengthened in most of East Africa, owing to improving agriculture sector growth following droughts and a rebound in private-sector credit growth. “In Ethiopia, growth will remain high, as government-led infrastructure investment continues,” the report stated.
“For many African countries, the economic recovery is vulnerable to fluctuations in commodity prices and production,” said World Bank lead economist and author Punam Chuhan-Pole, adding that this underscored the need for countries to “build resilience by pushing diversification strategies to the top of the policy agenda”.
The report stated that public debt relative to gross domestic product was rising in the region, and that the composition of debt had changed, as countries had moved away from traditional concessional sources of financing towards more market-based ones. “Higher debt burdens and the increasing exposure to market risks raise concerns about debt sustainability: 18 countries were classified as being at high risk of debt distress in March 2018, compared with eight in 2013.”
Zeufack stated that the region and the continent as a whole could boost productivity across and within sectors, and accelerate growth by fully embracing technology and leveraging innovation.