By Phephile Motau
The World Bank has lowered prospects of economic growth in Sub-Saharan Africa from 3.6 per cent in 2022 to 3.1 per cent in 2023.
The World Bank says that uncertainty in the global economy, the underperformance of the continent’s largest economies, high inflation, and a sharp deceleration of investment growth are dragging down
economic growth in sub-Saharan Africa.
According to The Monitor, The Africa Pulse report released April 5 also states that slower investment growth in Sub-Saharan Africa is holding back long-term growth of output and per capita income, as well as progress towards achievement of the Sustainable Development Goals (SDGs).
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The report states that Economic activity in South Africa is set to weaken further in 2023 (0.5 per cent annual growth) as the energy crisis deepens, while the growth recovery in Nigeria for 2023 (2.8 per cent) is still fragile as oil production remains subdued, the report highlights.
The real gross domestic product (GDP) growth of the Western and Central Africa sub-region is estimated to decline to 3.4 per cent in 2023 from 3.7 per cent in 2022, while that of Eastern and Southern Africa declines to 3.0 per cent in 2023 from 3.5 per cent in 2022.
It was further reported that investment growth in Sub-Saharan Africa fell from 6.8 per cent in 2010-13 to 1.6 per cent in 2021, with a sharper slowdown in Eastern and Southern Africa than in Western and Central Africa.
“Weak growth combined with debt vulnerabilities and dismal investment growth risks a lost decade in poverty reduction,” Dr Andrew Dabalen, World Bank Chief Economist for Africa reportedly said.
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“Policymakers need to redouble efforts to curb inflation, boost domestic resource mobilization, and enact pro-growth reforms—while continuing to help the poorest households cope with the rising costs of living,” he added.
The World Bank report indicates that debt distress risks remain high with 22 countries in the region at high risk of external debt distress or debt distress as of December 2022.
Unfavourable global financial conditions have increased borrowing costs and debt service costs in Africa, diverting money from badly needed development investments and threatening macro-fiscal stability.
The report further states that “stubbornly high inflation and low investment growth continue to constrain African economies, adding that while headline inflation appears to have peaked in the past year, inflation is set to remain high at 7.5 per cent for 2023, and above the central bank target bands for most countries.”
