EAC should take positive economic growth with cautious optimism
More in Opinions
The International Monetary Fund and Fitch Ratings concur on Rwanda’s positive economic outlook. While each country is unique in its circumstance, this reflects on the wider EAC, specifically Uganda, Tanzania and Kenya, which are as favourably projected.
The just-released IMF Regional Economic Outlook for Sub-Saharan Africa reports that the four EAC members states are expected to sustain annual growth rates of five per cent or higher.
Rwanda, for instance, is expected to grow by 6.2 per cent in 2017 as vouched at the IMF second review of country’s Policy Support Instrument in Kigali this week.
The percentage growth coincides with Fitch forecasts for this year, onward to 6.6 per cent in 2018 (See “Fitch confirms Rwanda’s economic outlook as stable”, The New Times, May 15, 2017). If the projection holds, this will mean more than a slight improvement from the 5.9 per cent growth registered last year.
It is the same with the other three member states. According to the IMF report, their economies’ comparative strength is due in large measure to public spending and investments in infrastructure.
Generally, however, one wishes the positive outlook rubs on Burundi, which remains in economic doldrums, as much as South Sudan which continues to be wracked by conflict. But a wish is only a wish, and more a measure of intent than effective action.
What is certain is that the two countries must weigh their options with the better able section of the EAC playing its role to offer the support it must, even if it means shouldering a heavier load to prop them up.
This is not to say it has not been happening with the various efforts to intervene in the two countries. This is to say that there should be a doubling of the ongoing political undertaking, otherwise the reverse might be as true that the two weaker countries may taint the effort and economically pull all others back.
Still, the EAC is not an island, despite what it must do to ensure a girdle of prosperity around the entire Community.
EAC cannot afford to be oblivious of what lies around it. It is worth noting that with broad regional initiatives such as COMESA, Africa is more connected than ever bringing closer countries as far north as Egypt.
It therefore makes it pertinent to note that, while the EAC is on an upward curve, Sub-Saharan Africa’s growth has fallen to its lowest level in more than 20 years. IMF projects a weak recovery to a 2.6 per cent growth rate this year from a low of 1.4 per cent in 2016 for two thirds of countries south of the Sahara.
The head of the IMF’s African Department, Abebe Aemro Selassie, is quoted cautioning that while sub-Saharan Africa remains a region with tremendous potential for growth in the medium term, it is with limited “external environment” support. Strong and sound domestic policy measures are therefore urgently needed to reap this potential.
The “external environment” signifies such as US fiscal policies tied to dollar including the incidence of drought, pests, and security issues, according to the report. This means that all are vulnerable, economic laggards as well as those doing better.
Thus, drawing from this, the report reminds countries where growth is still strong such as in the EAC that it will be important to address emerging vulnerabilities from a position of strength.
It also urges strengthening social protection for the most vulnerable people. The current environment of low growth and widening macroeconomic imbalances risks reversing recent progress made in alleviating poverty.
The report adds that existing social protection programs are often fragmented, not well-targeted, and cover a small share of the population. It suggests savings from expansive and untargeted schemes such as fuel subsidies could be put towards helping vulnerable groups.
To these I would add that the “vulnerable” should include our brethren in South Sudan and elsewhere who remain our regional and international responsibility.
While the IMF Regional Economic Outlook for Sub-Saharan Africa offers a bleak appraisal, it is as much a reminder as the Fitch Raising’s affirmation that something must be working and must be guardedly maintained and bettered.