Economic growth in Africa rebounded, but “not fast enough” in recent past, according to Africa’s Pulse, a bi-annual analysis of the state of African economies conducted by the World Bank, released on Wednesday in Washington.
The report, which was released during the World Bank Spring Meetings, however shows that, “Growth prospects have 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 suggests that Sub-Saharan Africa’s growth is projected to reach 3.1 per cent in 2018, and to average 3.6 percent in the 2019–20 period.
The growth forecasts are based on expectations that oil and metal 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-crisis growth levels,” said Albert G. Zeufack, World Bank Chief Economist for the Africa Region.
To achieve high and sustained levels of growth, Zeufack says, African governments must speed up and deepen macroeconomic and structural reforms.
The moderate pace of economic expansion reflects the gradual pick-up in growth in the region’s three largest economies, Nigeria, Angola and South Africa. Elsewhere, economic activity will pick up in some metals exporters, as mining production and investment rise.
Among non-resource intensive countries, solid growth, supported by infrastructure investment, will continue in the West African Economic and Monetary Union (WAEMU), led by Côte d’Ivoire and Senegal.
“For many African countries, the economic recovery is vulnerable to fluctuations in commodity prices and production,” said Punam Chuhan-Pole, World Bank Lead Economist and the author of the report.
“This underscores the need for countries to build resilience by pushing diversification strategies to the top of the policy agenda.”
Public debt relative to GDP is rising in the region, and the composition of debt has changed, as countries have shifted away from traditional concessional sources of financing toward more market-based ones.
Higher debt burdens and the increasing exposure to market risks raise concerns about debt sustainability: 18 countries were classified at high-risk of debt distress in March 2018, compared with eight in 2013, according to the report.
“By fully embracing technology and leveraging innovation, Africa can boost productivity across and within sectors, and accelerate growth,” Zeufack added.
This issue of Africa’s Pulse is said to have a special focus on the role of innovation in accelerating electrification in Sub-Saharan Africa, and its implications of achieving inclusive economic growth and poverty reduction.
The report says that achieving universal electrification in Sub-Saharan Africa will require a combination of solutions involving the national grid, as well as “mini-grids” and “micro-grids” serving small concentrations of electricity users, and off-grid home-scale systems.
Improving regulation of the electricity sector and better management of utilities remain key to success, it says.